WHY LOCKING UP SHARES (WITH A GTC ORDER) IS A MYTH:

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riskreward007
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WHY LOCKING UP SHARES (WITH A GTC ORDER) IS A MYTH:

Sunday, October 22, 2017 10:49:01 AM

Post# 3635 of 3649
Posted On: 10/22/2017 1:47:32 AM

Posted By: CyberC

To all investors:

Re: M&M's borrowing shares

I spoke directly to a TD Ameritrade Representative ( I asked....can putting your shares up for sale in a margin account prevent M&M's from borrowing your shares?) who had to take that exact question to a superior to get an answer. I was very disappointed when they told me that even if the shares were for sale, that the M&M's can still borrow their shares. The only way to keep M&M's from being able to borrow the shares of an investor was to have them in a Cash Account. I have put all of my shares in a Cash Account!!!

Another poster said that Fidelity told them the same thing.

CyberC

moneym8ker
Thursday, 07/28/16 01:43:35 PM

Post # 66137 of 66205

No sell order at ANY PRICE "locks up" your shares.

Do you have a "margin account" with your brokerage? If you do? Then you accepted an agreement in the account sign up process and your (SFOR) shares can be borrowed from you and loaned out.

This is TRUE FOR ALL ONLINE BROKERAGES.

Have a cash account only with no margin account enabled. Then your (SFOR) shares are safe from being borrowed.

Not convinced that the "lock your shares up with GTC orders" is just a myth?

Contact your broker (Etrade, TDA, Scottrade, Fidelity, etc) and do two things:
1) determine if you're cash account only or if you've enabled margin trading.
2) request a "Loan Exempt Restriction". This restriction exempts your shares...all shares in the account, from being loaned out.

Still not convinced?

Read FINRA RULE 4314-4330. The rules specifically cover the borrowing and loaning of shares held in accounts of online brokerages as well as brick and mortar brokerages.

GTC orders DO NOT LOCK UP YOUR (SFOR) SHARES.

So why is it important to dispel this myth?

Simple...if you believe the myth, and you've done nothing more than put a GTC order in for your SFOR shares then YOU’VE ACTUALLY DONE NOTHING AND YOUR SHARES ARE STILL BEING BORROWED AND LOANED OUT.

Any trader, on any board who perpetuates this myth does more harm than good.

CORRECTLY "locking up your shares" HURTS "SHORTY".

Incorrectly locking up your (SFOR) shares ACTUALLY HELPS SHORTY!

How? How does incorrectly locking up your shares HELP THE VERY GROUP OF TRADERS YOU DONT WANT TO BE HELPING IF YOU’RE LONG SFOR?
It helps them because you only THINK you're locking up shares...but you haven't locked up anything. So now, thinking you're shares are safe from shorty, they're not at all safe and shorty gets to borrow borrow borrow all day long with you blind to the fact that you're actually hurting yourself.

Get the facts...repeat the facts...dispel the myth AND ACTUALLY MAKE YOUR LONG SHARES STRONGER BECAUSE THEY ARE OFF THE SHORTS TABLE!


moneym8ker Friday, 07/29/16 03:57:15 PM
Re: Plato post# 66669
Post # of 66681
Plato...

Those who claim that a GTC sell "locks up" your shares from being borrowed and loaned out from shorts are part of the problem...certainly not the solution.

In fact, it actually HELPS SHORTS who propagate this myth to their own favor.

Let's say I'm a short.

I tell longs...any long who will listen, to simply lock up their shares with GTC sell orders. Those longs who believe it, and don't research it... enter GTC sell orders thinking it will help prevent shorting...when in fact, they've done nothing.

It'd be like a burglar saying "all you have to do to keep burglars out is "cast a spell over your doors and windows" knowing full well that locks, not spells, are what keeps a burglar out.

All others who continue this GTC with high sell orders myth...you're to blame for keeping your millions of shares available to be borrowed/loaned out, and then shorted.

riskreward007
Thursday, 07/28/16 06:36:49 PM
Re: moneym8ker post# 66144

Post # 66211 of 66214

CORRECT INFORMATION ON LOCKING UP YOUR (SFOR) SHARES:

1) CASH ACCOUNT: DO NOTHING. Your shares are ALREADY LOCKED UP and can't be loaned out for shorting by your broker.

2) MARGIN ACCOUNT: Complete a LOAN EXEMPT RESTRICTION (LER) form that's available from some online brokers to prevent the loaning out of your shares. If they won't give you a LER, then move your shares to a cash account.


I REALLY HOPE THAT PEOPLE HERE WILL PAY ATTENTION TO THIS, AND STOP PERPETUATING THE MYTH OF: LOCKING UP YOUR SHARES WITH GTC ORDERS (WHICH DOES NOTHING TO PREVENT THEM FROM BEING LOANED OUT). I SEE THIS MYTH PERPETUATED CONSTANTLY ON PRACTICALLY EVERY STOCK BOARD I VISIT.

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