[tptacek]

NSCC collateral rules are widely believed to follow directly from Dodd-Frank requirements. It's also hard to understand the supposed conspiracy you'd be prosecuting NSCC for. Is the idea here that NSCC was somehow corrupted by agents of hedge funds short on GME?

[kjksf]

"widely believed"? Believed by whom and why? Dodd-Frank is not a secret. There either is a requirement in Dodd-Frank act or not. If there is, you or the persons believing it could just quote the relevant text.

According to Vlad from Robinhood, as said in Clubhouse interview with E. Musk, there is discretionary (i.e. arbitrary) part of the collateral requirement set by NSCC.

Initially NSCC asked RH for $3 billion in collateral which RH didn't have and they managed to negotiate it down to $700 million, which they did have.

Which begs the question: if $3 billion was required by Dodd-Frank, then did NSCC commit securities fraud by agreeing to lower it to $700 million?

And if $700 million was enough to satisfy Dodd-Frank, then why did they ask for $3 billion initially?

And what if $500 would be enough? Or $200 million?

Or maybe Dodd-Frank doesn't dictate collateral requirements on an individual stock at all?

[tedunangst]

What you're looking for is Title VIII: Payment, Clearing, and Settlement Supervision.

[ummonk]

You make it sound like the DTCC is some neutral 3rd party organization that isn't there to represent Wall Street.

[baq]

Nitpick: your comment implies that the DTCC is representing Wall Street, but it is an understatement: DTCC for all intents and purposes is Wall Street. DTCC is owned by (quoting wikipedia here - sic!) "banks, brokers". It's a 6 minute walk from NYSE to DTCC (which shouldn't be surprising).

Given that, it isn't outside of realms of possibility that raising of collateral requirements had additional objectives other than simply limiting risk on the system (which, I should mention, was very, very real - in case RH went bankrupt). Normal people won't have any way to know.

[sillysaurusx]

Nah, no conspiracy. I just don't like that they can change their collateral requirement from 3% to 100% for specific stocks in one day, regardless of the reasons.

To turn it around: should they have the authority to enforce a 33.3x collateral increase with no oversight simply because they feel it's necessary for the world to stop trading GME? This is the heart of what I hope will be regulated.

BTW, playing whiskey slaps was fun. It was nice to see the crazy pentester world, even if I had wrong expectations going in. Hope you've been well!

[tptacek]

I don't understand why you believe NSCC "felt it was necessary for the world to stop trading GME".

[baq]

this one's easy: the financial world experienced a 7-sigma event for which institutions were unprepared for and somebody figured that it is worth pulling the emergency brake lever. for a few days GME was almost perfectly reveresly correlated with SP500 - there was a lot of derisking happening all at once. this couldn't all have been retail moving from SP500 to GME.