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kinance t1_iu9d3ey wrote

Reply to comment by grimkhor in Are your shares being delivered - SECURITIES EXCHANGE ACT OF 1934 ? by NOVUS_ORDO_SECLORUM6

How do u make accurate assessment of price of anything if supply is manipulated. Say a world with 1 apple and 100 oranges the apple rare there is only 1. Now i will ftd apples when people buy them i sell hundreds of imaginary apple that i never deliver. I never have to deliver the apple i just keep money until people need to get rid of their apple to get something else.

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NOVUS_ORDO_SECLORUM6 OP t1_iu9fm67 wrote

Exactly. And to be clear, the industry justifies FTDs through rule:

Rule 203(b)(1) and (2) — Locate Requirements. Rule 203(b)(1) generally prohibits a broker-dealer from accepting a short sale order in any equity security from another person, or effecting a short sale order in an equity security for the broker-dealer’s own account, unless the broker-dealer has: borrowed the security, entered into a bona-fide arrangement to borrow the security, or reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due. Rule 203(b)(2) provides an exception to the locate requirement for short sales effected by a market maker in connection with bona-fide market making activities.

With this rule, the broker-dealer basically just always says either they had reasonable grounds to believe they could borrow the share or that they were participating in bona-fire market making activities. Yet there is no proof required at all to verify this, they literally just say it.

After this happens and a share cannot actually be located or borrowed come settlement, a FTD is generated.

So again, 2.6 Billion FTDs reported second half of September. 2.6 Billion times broker-dealers said they thought they could borrow a share and were wrong. Clearly an extraordinary amount of corruption.

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