Wow you are correct! Thank you for catching this, will update Trillion to Billion.

As a note though, checking the SEC link, the data that is shown is an aggregate snapshot on the specific day of reporting. It shows existing FTDs and new FTDs as of that reporting day. Since this data is only generated 2 times on scheduled dates per month, we are effectively only seeing 2 trading days per month of FTD data. This means that between the reporting dates there could be a FTD spike, but if they are settled before the next reporting date, they would never be captured in the data.

So the data is not cumulative over the first half or second half of the month period as the naming convention seems to imply, it is just a reference on a certain given day. We could never know the true cumulative FTDs because that’s not what’s reported.

All of this. And at the same time there is a special police force, tasked with the sole purpose to prevent this level of corruption. But the police are sitting around eating donuts with the car CEOs watching and letting it all happen.

Copium is surely needed for the level of corruption in the stock market.

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.

You can make that assumption, but as stated in the post just last month 2.6 Billion FTDs were reported across 68k tickers… this affects everyone who purchases stock of a public company… and every publicly traded company…

This is true as well, my response was mainly to focus on how, if things even like a vote actually being counted properly existed, there is still a great issue with FTDs as far as an investment.

Great analogy. And on top of that, it’s not just the single buyer of the car in this specific case that’s affected right? What about all of the other people that already own this car, but are now looking for a new model. Well, when they go to sell the car (real car) it’s not worth as much as it should be because the dealer already sold a ton of empty cardboard boxes to other consumers; KBB data says there are a bunch of these cars out there and a bunch of others for sale, this car isn’t worth as much because a buyer can find this car anywhere from a seller who will probably take less to sell it.

u/Freadom6

You mentioned you can sell it later, but who is to say that it will be at a profit? It could be at a loss. And that loss could exceed whatever dividends that were paid out or positive company direction based on voting outcomes. If brokers continue to FTD on other trades for the same company you have invested stock in, over the years there is greater chance that the value of the stock will go down. And that is not necessarily from accumulating a massive amount of outstanding FTDs at any given time. Even if/when FTDs are settled, having existed at any point the FTDs dilute the value of the shares. The reason is that they are effectively producing more shares of the company than actually exist, and just like any example of supply and demand, excess supply devalues the underlying good. And that is just the direct effect that brokers who FTD have on the value of companies’ stock. By devaluing the stock, they are inhibiting the financial well-being of the company and limiting business potential based on a lower valuation. This can affect the success of the company and therefore indirectly devalue the stock.

This isn’t about shutting down the stock market, it’s about regulating the stock market per United States laws. The SEC is clear as day not doing so, which affects all investors and only enriches financial institutions. So are you against upholding the laws, especially when identifiable damage is being done?

If your money making plans are to buy a stock and then later sell it at a greater value, it’s going to be more difficult to make money if you buy a stock and it is never delivered (FTD). It will show in your broker account but that doesn’t mean it was settled by the broker. Why would the seller FTD your stock? Because they sold you something that they don’t own so they can’t deliver it to you, which means that price you paid is just a price that is not necessarily the true market value of the stock. That means you may have overpaid (or underpaid but who knows, not you). The sellers that are FTDing and selling stock that they don’t own essentially want you to overpay because they want the price of the stock to go down, you sell at a loss, they buy the stock back at a lower price and then your loss is their gain, all while they never actually owned the underlying security at all. You basically just gave them free money because the SEC lets them FTD. Shouldn’t someone that sells something to you actually own the product, and also literally give you the purchased product?

SEC tries to make you think that FTD is ‘just part of the system, see we even give you the data’. Well it’s not. That’s not to say that FTD would never happen, though when it happened the offender is to be reprimanded, including suspension and expulsion from participating in the clearing agency (and therefore market). 2.6 BILLION FTDs that’s not a slip, that’s systemic. Clearly the SEC has and is not doing anything to adhere to these federal laws.