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by koolba
12 days ago
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There’s always a buyer on the other side of a short, naked or located. The question is whether the originating broker actually borrowed the shares. They are supposed to verify that before they place the trade and generally do follow the rules. Because if they don’t, they will be not allowed to allow any short sales for that security. |
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SEC is clearly ignoring FTD’s and as a result allowing MM’s to reloan unlocated synthetic shares.
Which is exactly what happened in 2008 with mortgage backed securities and CDO’s.