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by slt2021 551 days ago
they can keep failure to deliver forever until the market moves in their desired position to actually send orders to lit market.

they use derivatives and heavily recycle buy/sell shares to keep kicking the FTD can down the road for as long as the market returns to their desired position.
1 comments
wbl 551 days ago
No they can't. They can keep a short position but that isn't failure to deliver.
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slt2021 551 days ago
the T+1 timer can be easily reset every day, until the market price reverts back to the Citadel's modeled price at which it is profitable/least losses for them to send order to lit market
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toast0 551 days ago
What are the mechanics of that?

Let's say I buy a share of F on Monday, my brokerage routes it to Citadel, because PFOF.

On Tuesday, I expect to get a share of F delivered at close of business, because T + 1.

If Citadel doesn't deliver on Tuesday, what happens?

Are you suggesting they would continue to not deliver the share I purchased for several days, by saying oh yeah, we'll get toast0 his shares tomorrow? That would be pretty upsetting, and I imagine I'd call my brokerage and ask them why they're dealing with Citadel if they never deliver shares on time.

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slt2021 551 days ago
you will receive share in your name in a database, but physically it will be stored "in the street name" in the depositary house, of which there is only one.

plus even if there is only a single share authorized for stock exchange, there will be more than one in the float, due to synthetic shares: created when shares are borrowed and then reshorted, created to support derivative market (selling calls and buying puts). ALso borrow/rehypothecation mechanics is recursive, since shares are fungible, I can recursively re-borrow and re-short the same share, creating synthetic shares out of thin air, supported by nothing other than some bytes in the database somewhere, and not physical shares

https://news.ycombinator.com/item?id=26011135

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wbl 551 days ago
The prime broker has a lot of money and will cover their customer blowing up in a net short position. They manage that with margin agreements. That isn't nothing.
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