I really don't understand why FTDs are allowed. Seems like they just add systemic risk in order to enable shorts to manipulate the market more easily. Can't think of a reason why that is desirable unless the goal is to fleece retail investors.
Why not just force the BD to buy at market price to ensure delivery?
- Total short interest in every stock updated daily, both settled and in progress.
- (edit) report daily fails to deliver (not just a running total), and published at T+2 rather than every couple weeks.
- For every trade, publish whether it's a short sale or sale of an owned asset.
- SEC tracks each companies' daily borrows and fails to deliver, with consequences.
- Every short sale must be submitted with a borrow agreement from someone who has already agreed to lend you the shares. SEC checks these are not fraudulent or frequently cancelled.
- Everyone should have access to the trading data that you currently need a Bloomberg terminal for.
- Every share has a serial number. Every trade must include a list of serial numbers of every share in that trade, with proof that you own or were lent those exact shares.
Like I said, I"m no expert, so responses welcome.
- If you lend out your shares, you can't "sell" them until you've recalled them and had them delivered to you.
If the float is X, then there shouldn't be more than X shares available to sell at any given time. In the current system shorting increases apparent supply which devalues the stock.
I'm not sure what the truth is here, but if the accusations are correct I think it's fraud level stock market manipulation.
I've only seen those accusations on reddit and twitter. The only "evidence" I've ever seen in support of those accusations is repeated citation of short interest. Short interest is an aggregate figure which doesn't track specific firms, so it can't be used to discover if an individual fund closed or opened a short position.
Random redditors, and they were quoted by CNBC and the like
The post I replied to asked what people are demanding. They are demanding that institutions not lie to manipulate the market. I am not claiming this lying ever took place.
> The only "evidence" I've ever seen in support of those accusations is repeated citation of short interest.
In addition to that, they claimed that volume in GME was not high enough for the shorts to be closed. I'm not familiar enough with the markets to know what I don't know here though.
dark pools/OTC trades, maybe?
Put yourself in the firm's position and think about this from a game theoretic perspective...what is the upside in lying? The thinking is that you might convince people to lay off the voracious buying if you make it seem like the short squeeze isn't possible because you're out? That seems like a stretch and would require navigating lots of wild assumptions about why this almost unprecedented price action is happening.
On the other hand, there is tons of downside. If the plan doesn't work and the price continues its meteoric rise, you're bankrupt. If you're caught lying, you're additionally hit with securities fraud. Then the veil is pierced and the partners are at risk of losing their money. On top of this if your investors are savvy they'll sue you for breaking fiduciary duty because you didn't close out a position that makes selling naked SPY calls look safe. This also puts the partners' private capital at risk.
It would be cartoonishly dumb to lie about closing the position instead of actually doing it.