w*******s
发帖数: 1644 | 1 Tomorrow will begin the first day of new FINRA market rules that will affect
short sellers across the exchanges. These new rules will massively change
how traders and market makers deal with short and naked short selling of
stocks.
According to these FINRA rule filings, three new laws and regulations go
into affect starting on February 28th, and in this, it will remove a
universal exemption used by market makers to get away with failing to
deliver stock according to current SEC rules.
There’s 3 new laws gaining attention in the NSS market reform arena:
FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open
delivery failures FINALLY applying to shares of non-reporting corporations.
FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt
” (SSE) marking requirements for trade reporting and the OATS system. Those
MMs accessing the bona fide MM exemption from executing pre-borrows or “
locates” before admittedly naked short sales must now FORMALLY acknowledge
the accessing of that universally-abused exemption. Being that these trades
are theoretically being made to “inject liquidity” then the excuse to hide
the related trade data from the public’s eyes goes out the window. You can
’t have it both ways and claim the bona fide MM exemption and later claim
that the related trade data needs to be kept secret because it might reveal
a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-
abused exemption cover their naked short position on the next downtick after
their short sale when buy side liquidity is in need of being ejected as
share prices fall. The 3rd new rule which is in effect now states that the
offers and bids that MMs post must be of approximately the same size. No
longer can the offers be of 1 million shares and the offsetting bid good for
the minimum 5,000 shares.
What this means for investors and traders is that many of the games large
brokers and market makers use to manipulate a stock by holding down investor
interest through short selling, or by using a small sell to offset a large
buy to keep a stock from moving in a particular direction, will be illegal,
and open to investigation.
Examples of this type of manipulation occur when investors put in bids to
purchase say, $100,000 shares of XYZ stock at the current market price of
say 10.00 per share. The market maker will purchase those shares in the
open market in blocks as they can accumulate shares until the purchase is
completed. Then, a market maker will bring down the price through
manipulation, by selling short a block of say 5000 shares at $9.95. The
ratio of strong buying to selling was 20:1, but after both transactions took
place, the stock actually fell $.05.
Thus the market maker controls the market of stock through manipulation,
instead of simply allowing for the equity to move according to natural
market forces.
Horror stories abound of market maker manipulation and naked short selling.
There was even a proven case where an investor owned 150% of the shares
that a company legally had in the market. This means, 50% of the investors
shares were invisible and were created out of thin air, established through
naked short selling by a broker, or market maker.
Tomorrow begins a new day for the US markets, and new rules that could prove
interesting for investors. If the SEC and FINRA follow through with
enforcing these new rules, then we could see the markets skyrocket upwards
as short sellers desperately battle to purchase their necessary stock back
at any price. | w*******s
发帖数: 1644 | 2 Tomorrow will begin the first day of new FINRA market rules that will affect
short sellers across the exchanges. These new rules will massively change
how traders and market makers deal with short and naked short selling of
stocks.
According to these FINRA rule filings, three new laws and regulations go
into affect starting on February 28th, and in this, it will remove a
universal exemption used by market makers to get away with failing to
deliver stock according to current SEC rules.
There’s 3 new laws gaining attention in the NSS market reform arena:
FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open
delivery failures FINALLY applying to shares of non-reporting corporations.
FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt
” (SSE) marking requirements for trade reporting and the OATS system. Those
MMs accessing the bona fide MM exemption from executing pre-borrows or “
locates” before admittedly naked short sales must now FORMALLY acknowledge
the accessing of that universally-abused exemption. Being that these trades
are theoretically being made to “inject liquidity” then the excuse to hide
the related trade data from the public’s eyes goes out the window. You can
’t have it both ways and claim the bona fide MM exemption and later claim
that the related trade data needs to be kept secret because it might reveal
a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-
abused exemption cover their naked short position on the next downtick after
their short sale when buy side liquidity is in need of being ejected as
share prices fall. The 3rd new rule which is in effect now states that the
offers and bids that MMs post must be of approximately the same size. No
longer can the offers be of 1 million shares and the offsetting bid good for
the minimum 5,000 shares.
What this means for investors and traders is that many of the games large
brokers and market makers use to manipulate a stock by holding down investor
interest through short selling, or by using a small sell to offset a large
buy to keep a stock from moving in a particular direction, will be illegal,
and open to investigation.
Examples of this type of manipulation occur when investors put in bids to
purchase say, $100,000 shares of XYZ stock at the current market price of
say 10.00 per share. The market maker will purchase those shares in the
open market in blocks as they can accumulate shares until the purchase is
completed. Then, a market maker will bring down the price through
manipulation, by selling short a block of say 5000 shares at $9.95. The
ratio of strong buying to selling was 20:1, but after both transactions took
place, the stock actually fell $.05.
Thus the market maker controls the market of stock through manipulation,
instead of simply allowing for the equity to move according to natural
market forces.
Horror stories abound of market maker manipulation and naked short selling.
There was even a proven case where an investor owned 150% of the shares
that a company legally had in the market. This means, 50% of the investors
shares were invisible and were created out of thin air, established through
naked short selling by a broker, or market maker.
Tomorrow begins a new day for the US markets, and new rules that could prove
interesting for investors. If the SEC and FINRA follow through with
enforcing these new rules, then we could see the markets skyrocket upwards
as short sellers desperately battle to purchase their necessary stock back
at any price. |
|
