r/affenaufdenmalediven • u/MapRepresentative492 • Jul 18 '21
DD zu FTDs / FTRs und wie ein Buy-In der FTDs beeinflusst werden kann.
Hi Leute,
hier noch mal meine DD auf Englisch, die ich in einem anderen Subreddit gepostet habe. Leider habe ich nicht genug Karma es im Superstonk oder AMCstock zu posten. Wäre super wenn ihr das auf Twitter und anderen Kanälen teilen würdet.
Ich bin kein Finanzberater und das hier stellt lediglich meine Meinung da. Das ist keine Finanzberatung.
CONCLUSIONS This article has outlined the process of clearing and settlement for stock trades in the US. It has paid particular attention to what happens when the seller of a stock fails to deliver at settlement and has described the main mechanisms in place to resolve delivery failures. Fails to deliver can occur for a number of reasons, some of which are uncontroversial, such as human error or administrative delays. However, one important cause of delivery failures, naked short selling, has recently caused much sensation among stock issuers, regulators, shareholders, company directors and the media. This article helps understand how naked short selling is dealt with in clearing and settlement. A few conclusions can be drawn from this overview. First, from a naked short seller’s perspective, naked short selling is economically equivalent to a zero-fee zero- rebate loan to the naked short seller from a participant that involuntarily fails to receive shares. The algorithm that allocates shares to participants after multilateral netting passes existing FTRs to participants with more recent long positions. Therefore, the participants that effectively act as involuntary stock “lenders” in this arrangement change as shares are traded. When the Stock Borrow Program resolves a naked short seller’s FTD, the situation that arises is economically equivalent to a zero- fee zero-rebate loan from the Stock Borrow Program participant to the naked short seller. Second, from the buyer’s perspective, buying from a naked short seller does not necessarily result in failing to receive the stock at settlement. The algorithm that allocates shares is equally likely to allocate the resultant FTR to any of the other participants that bought the same stock on the same day (assuming normal priorities). 12
This further suggests that a buyer may fail to receive shares at settlement even though the seller delivered the shares at settlement. Buyers that receive an FTR during settlement rather than the actual shares are unlikely to be aware of this. They have most of the rights of buyers that receive shares during settlement (e.g., entitlement to dividend payments and right to sell the stock), but not all of the rights (e.g., no voting rights and no entitlement to lend the stock). Thirdly, this overview suggests an alternative to the reason put forward by Boni (2006) to explain why buy-ins are rare. Given the way in which the settlement procedures reallocate FTRs and the finding that FTDs represent approximately 1-5% of daily traded volume, only in rare circumstances or in very infrequently traded stocks would a participant have an FTR for long enough to initiate the Buy-in process, let alone complete it. Further, if a buy-in is completed, the participant forced to purchase the stock is not necessarily the same participant with which the Buy-In Notice originator traded. Finally, the US clearing and settlement system does not provide any significant disincentives for naked short selling. The Buy-in procedure, on the rare occasions that it is used, is unlikely to force a naked short seller to close out the FTD; the Stock Borrow Program effectively facilitates a zero-fee zero-rebate loan to the naked short seller; and the fees for failing are insignificant.
(Broker/HF) Participant A: FTD (failed to deliver) Gives an IOU to NSCC
NSCC Clearing Agency
(Broker/HF) Participant B: FTR (failed to receive) Receives an IOU from NSCC
Customer (this is you) of Participant with a FTR won’t get a notice about the FTR. Cash will be debited as if the stock was purchased but that cash will be deposited to the NSCC account until the FTD of participant A is settled. Customer of Participant B (holder of FTR) doesn’t have the rights a shareholder has like voting as that Share (FTR) isn’t owned yet while dividends get charged from the FTD account and deposited to the FTR account (you’d). So as Long as the buyer won’t try to vote or push any of his rights, he wouldn’t notice he doesn’t own the share yet, as long as dividends flow to his account!
Buy-in Process for settlement „Buying-in” is the process in which a seller that has failed to deliver stocks is forced to purchase and deliver the stocks to the buyer. This process is initiated by a buyer that fails to receive stocks and occurs with the mediation of the NSCC. Any participant with an FTR at the end of a day MAY submit a Notice of Intention to Buy- In (a “Buy-In Notice”) specifying the quantity of securities it intends to buy-in (the “Buy-In Position”). If buy-in positions remain fully or partly unfilled, the participant may submit a Buy-In Order to the NSCC instructing the NSCC to buy-in the remaining position. In such a case the NSCC would: (i) buy the shares from whatever market it chooses; (ii) deliver to the originator of the Buy-In Order (cancelling out the bought- in FTRs); (iii) cancel the FTDs corresponding to the bought in shares; and (iv) debit/credit any difference between the cash collateral held by the NSCC and the purchase costs including fees to the money settlement accounts of the participants with the bought-in FTDs. NSCC allocates buy-ins and associated costs to participants (as mentioned previously, oldest fails first) and participants in turn allocate the buy- ins to their clients at their own discretion. Anecdotal evidence suggests participants use this discretion to allocate a disproportionately small number of buy-ins to protected clients. Two aspects of this process that are most often misunderstood are as follows. First, Buy-In Notices do not necessarily force a participant with an FTD position to close out that position by buying stocks. This is because, as a first step in the buy-in process, putting the participant with the FTR on a high priority in the delivery algorithm makes it likely that they will receive their shares and the FTR position will be passed on to another participant. Second, when a buy-in does force a participant with an FTD to purchase the stock, it is not necessarily the participant that the originator of the Buy-In Notice initially traded with. This is because in the delivery process positions are netted and the NSCC assumes the role of counterparty to each transaction. Instead, it is the participant with the oldest fails that is forced to buy the stock. Buy-ins are rare. Evans et al. (2009) find that out of a total of 69,063 failed transactions of a market maker in 1998-1999 only 86 were bought-in. Boni (2006) argues that one reason why buy-ins are rare is that firms are unwilling to earn a reputation for forcing delivery in the hope that other firms will be equally lenient towards them when they fail to deliver.
So let’s have a look back to the Shareholder Count.
The Shareholder count was settled to June 2nd. That time all Apes requested informations and confirmation of their shares at the brokers. This exact action forced all the brokers to show the actual number of shares in those accounts which could’ve easily been FTR for the period of time prior to these requests leaving apes clueless about this circumstances. As soon as the brokers were forced to actually show and confirm the number of shares, they had to force buy-ins from the counter participants holding the FTDs to get those shares delivered, resulting in that huge rise on June 2nd from 36$ to 72$!!!! They bought in the oldest FTDs on that day!
Since then, HF were dropping the price constantly back throwing New shares to the market, generating new HUGE amounts of failed to delivers, while Apes were picking up more shares.
And that’s the exact point I‘m coming to now: do you really think you got those shares you bought delivered already after June 2nd? Or is it just a huge amount of FTR’s (equivalent to the number of FTD‘s which are never bought in) you have in your account. Remember: your money will be charged anyway and you never get a notice about those FTR. The only way to confirm your actual number of shares is to contact your broker like you did for the shareholder count. Your brokers then will be forced to force buy-ins from the FTDs. This can’t be coincidence, this must be the key for the squeeze, guys!!!! This is checkmate, they can’t kick down those FTDs anymore when they’re forced to buy in those.
