I prefer to look at the positive of increased institutional investment, from practically zero to 25% last quarter by 03/31. That is REAL. Why not talk about the 9% position of Jeffrey R. Jay, who has had success with BPAX and EXAS? Why complain about something the individual investor has no power over? This is not really a good short right now, as it is likely to spike over $3 when the CR is filed. There are PLENTY of genuinely overvalued stocks to short--why bother with DSCO?
that chart is not accurate. it actually minimizes the short shares outstanding. this is because the clearinghouses get rid of shares that won't close. they give the debt back to the broker who sold short and tell them they won't guarantee the trade. so the broker has to take them to other settlement arrangements. worse, no one ever reports naked short shares because brokers must cover those shares with borrowed shares and they think this is an expense. so they ship it off to "other" avenues.
this little game is coming to an end. FINRA and the SEC are dinging firms for having an outstanding short trade. debt swaps must be bought in by 7/15 and now no new debt swaps can be created.
clearinghouses have to be licensed by 7/15. one major clearinghouse has declined to get licensed, saying they are a data compression facility. i don't think that will work. and i expect the SEC to take the position that all brokers, if they outsource settlement, have to deal with licensed settlement agencies. further, FINRA is mandating that back office functions must have licensed/tested management by 12/15.
you can hear the brokers screaming in the background.
naked shortselling is fraudulent. you are selling a car that doesn't exist. no one wants to buy an imaginary car. and no one wants to buy shares that will be delivered sometime in the future, at the seller's convenience. shortsellers cannot issue stock.
longs can hold or buy, to thwart shortsellers. i'm planning to buy as long as they are giving investors such a good price.
pages 5 and 6 of the memorandum of block trades show you the size of the debt swaps to fund naked shortsellling, the fact that 12 entities are the main entities doing it.
the SEC went to the clearinghouse 7/21 and took data, and the data was analyzed that data. not all debt swaps were at the clearinghouse, so this is also a minimum.
since then, the SEC has required clearinghouses to give them data if they were going to be licensed as a clearinghouse. now you see why one major clearinghouse suddenly wants to be something else.
see the FINRA monthly and daily disciplinary actions. FINRA is dinging clearinghouses and brokers for outstanding shorted shares, not reporting data to the consolidated tape/government/public, not borrowing shares to cover the short EVERY DAY there is a short outstanding. they have also begun to ding brokers for not adhering to duedates.
the DTCC/clearinghouse now tracks all trades from the trading floor. brokers should worry about the outstanding short that they are waiting to receive if a broker doesn't enter the trade. the SEC has a daily update on all data, access to all. can't hide from the SEC any more.
a broker asked if debt swaps will be grandfathered in and you should have seen the shocked look on the SEC head's face. she said NO.
the brokers let the retail shortsellers continue to short, hoping they will get the price down lower so the brokers buy in their debt swaps cheaply. this is just about to happen.
the average NASDAQ stock is shorted 3 days of volume.
again, those reported shorted shares were traded by borrowed shares and then went naked. the #'s do not include naked short shares.