FINRA 2-28-11

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Posted by Duc N Altum:  Christian Investors

PJ
King of Diamonds
Posts: 3,907
Re: SEC Reg SHO changes 2-28-11/FINRA SSE 2-28-11

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“Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold longs to the paper gold shorts.” –Trader Dan Norcini
Dear Friends,

Between now and Monday, February 28th be prepared for panicked short sellers who cannot make delivery to try every trick in the book to buy back their short positions.

The following is information from Dr. Jim Decosta:

Here is the URL:
http://www.finra.org/Industry/Regulation…._Rule__Filings

Quote: 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.

The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded.

Here are the links to the rules SR-FINRA-2010-028 and SR-FINRA-2010-043:
www.finra.org/Industry/Regulation/RuleFilings/2010/P121522

Notice the part I marked in bold in the quote above:
“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.”

 

seagull
Administrator
Posts: 24,952

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By: taskforceviking

http://www.examiner.com/finance-examiner….r-short-sellers

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.

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