Statement of SEC Regarding Recent Market Volatility • Hacker News Board

Re: Statement of SEC Regarding Recent Market Volatility

#341

Post by adriancr » Fri, Jan 29, 2021, 4:33 PM UTC

andylei wrote: post #301

seabird wrote: post #276

Earlier quoted context omitted.

I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver -- not doing so is a Failure to Deliver, which is when your problem actually starts. The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm GME has been on the NYSE Threshold list for months:…

> I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver No, this is not true. When you sell short (with some exceptions for market makers), you are obligated to "find" shares to borrow (called "locates"). Usually your broker arranges this; any shares that you borrow cannot be lent to someone else. If you do not…

> you are obligated to "find" shares to borrow

Unless you know... you just dont. Or you are big enough to have an exception.

Whats the punishment?, how will they find you? (you dont need to disclose shorts)

Re: Statement of SEC Regarding Recent Market Volatility

#342

Post by cblconfederate » Fri, Jan 29, 2021, 4:33 PM UTC

jancsika wrote: post #121

A Moment in the Life of an HN Genius: 1. Reads a technical document outside their domain. 2. Feels dumb because they don't have a grasp on any of the concepts. 3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost. 4. Sees the word "manipulation" 5. Substitutes the laymen's definition of "manipulation"…

It's because "ze nerds" have rebuilt multiple industries that were "too hard to understand", because they work bottom-up, from first principles and reject gatekeepers. They 've even created an entire substitute version of the 'conomy which currently most people are mocking, but soon will be using daily.

Re: Statement of SEC Regarding Recent Market Volatility

#343

Post by joncrane » Fri, Jan 29, 2021, 4:33 PM UTC

zaphod4prez wrote: post #151

FartyMcFarter wrote: post #131

Earlier quoted context omitted.

> there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. Which part has little truth to it? The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.

(Disclaimer I do NOT know what I'm talking about, just repeating what I saw on Twitter) It seems like they've all closed their shorts already, most of them did on like day 2 I believe. In addition, other hedge funds have been on the winning side of this trade. Some of the orders for GME last few days have been absolutely massive, not coming from retail.

I believe the statements were worded in such a way to try to make people believe that the short squeeze was no longer in play, but the short interest in fact never changed and maybe even went up. I believe they were also worded in a way to be technically correct (for example if they had multiple short positions, e.g. naked short calls, if they "closed their short position" that could mean they chose their smallest/cheapest short position to close and it would be technically correct).

The data doesn't back up the broader (and presumably intended) interpretation of their statements.

In my (inexpert) opinion THAT is the definition of market manipulation.

Re: Statement of SEC Regarding Recent Market Volatility

#344

Post by hef19898 » Fri, Jan 29, 2021, 4:33 PM UTC

hrktb wrote: post #266

kodah wrote: post #185

Earlier quoted context omitted.

Personally, I think smart people just do this. When I got sick with COVID I cannot begin to describe the number of people who became doctors during this unprecedented time , only to send me outdated comments, articles, and speculation. All of these people thought they were smarter than the instruction I received from a real doctor, nurse practitioner, and the CDC. These were smart people, though, and mostly (but not…

I agree in principle. Then in real life example you will have real doctors and nurses giving conflicting advices and having wildly different viewpoints on the details. The easy to point to example is how a lot of doctors viewed masks at the beginning of the pandemic. Or how trickle down economics is also endorsed by experts. Or experts opinions on mental health drugs. And so many other subjects where it won’t be hard…

Conflicting doesn't mean that one, or both, opinions are wrong. There is more than solution to every problem.

Re: Statement of SEC Regarding Recent Market Volatility

#345

Post by FabHK » Fri, Jan 29, 2021, 4:33 PM UTC

kgwgk wrote: post #184

Dirlewanger wrote: post #143

Earlier quoted context omitted.

>nobody blames the speculators The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.

Shorting more stock than what actually exists is not really that different from shorting less stock than what actually exist. Imagine you short 50% of the outstanding shares. Now there are 50% more long positions than outstanding shares. It's not substantially different from having 100% or 150% more long positions than outstanding shares.

You could stipulate, though, that the outstanding short position mustn't exceed the net position, or equivalently that the total long positions can't exceed twice the net position. Why not? (This would require new regulation, but not be impossible, I think.)

If the total long or short positions exceed the underlying economics by a lot, you create all sort of weird incentives for manipulation, as can be seen in the CDS market sometimes.

Re: Statement of SEC Regarding Recent Market Volatility

#346

Post by gruez » Fri, Jan 29, 2021, 4:34 PM UTC

sendtown_expwy wrote: post #338

It seems like Robinhood, when it stopped trading on GME, decided to literally transfer money from the WSB retail traders to the funds who were short on the stock. But if Robinhood needed to halt trading in order to just survive as a brokerage, (and could demonstrate so), would that justify its behavior? Does anyone know more about laws and regulations concerning brokerages here?

>It seems like Robinhood, when it stopped trading on GME, decided to literally transfer money from the WSB retail traders to the funds who were short on the stock.

what?

Re: Statement of SEC Regarding Recent Market Volatility

#347

Post by acover » Fri, Jan 29, 2021, 4:35 PM UTC

jiofih wrote: post #291

acover wrote: post #72

Earlier quoted context omitted.

The issue isn't GME market cap vs the S&P 500. It's that the clearing houses, exchanges and other intermediaries that guarantee every trade may go bankrupt due to the $15+ billion loss on options that they may have to cover.

Why do clearing houses have to cover losses, isn’t it the options seller on the other side that takes it?

Let's say you are buying an option contract on an exchange. You don't know who is selling to you and whether they can actually pay you when the time comes. In order to solve this issue, intermediates act as a guarantor of all transactions allowing investors to treat each seller the same. This lets investors only care about price instead of "who".

I am not an expert, I only have very surface knowledge and don't know the exact chain of intermediaries for each market but I know one such guarantor is the Chicago mercantile exchange.

https://www.cmegroup.com/clearing/risk-management.html

Re: Statement of SEC Regarding Recent Market Volatility

#348

Post by kristopolous » Fri, Jan 29, 2021, 4:35 PM UTC

FabHK wrote: post #318

kasey_junk wrote: post #289

Earlier quoted context omitted.

Hedge funds are not homogeneous and the majority of them had no position whatsoever in any of the meme stocks. Some were long meme stocks. https://www.google.com/amp/s/www.marketwatch.com/amp/story/l... A Korean fund made a billion dollars on a 12 million dollar GmE investment and they were only the 7th largest holder of GME shares. The wsb narrative of this sticking it to Wall Street is just false. I personally thin…

> it’s a narrative propped up intentionally by wsb insiders for their own gain. Yes, in particularly the passionate pleas to buy in more and HODL, stick it to the man, stick it to the evil shorts. While enabling the early longs to cash out profitably. Bit like Bitcoin, really.

It's the same hustle. I've been clicking through some of the usernames that are posting.

I've been noticing some interesting patterns. Accounts that seem to have been abandoned for months or years are commenting all of a sudden.

Makes me think some of these very similar looking frantic lunatic posts are part manufactured.

It'll take a good effort to show it conclusively

Re: Statement of SEC Regarding Recent Market Volatility

#349

Post by linuxftw » Fri, Jan 29, 2021, 4:35 PM UTC

xd1936 wrote: post #154

malwarebytess wrote: post #119

Earlier quoted context omitted.

Robinhood says that they basically couldn't fulfil the buy orders because they ran out of money, or couldn't fulfil the orders without breaking the rest of the platform. I imagine whatever the reason there's going to be lawsuits.

They over a day to say that. Instead, they decided it was clearer to say "we're temporarily restricting trading due to volatility". If what you said really was the issue... Why not just say that? They're a startup. They'd be forgiven. Why hide behind vagueness?

It's a highly regulated industry. Brokers can't just take actions. Perhaps they hit some regulatory corner case and nobody knows how the SEC is going to react.

Re: Statement of SEC Regarding Recent Market Volatility

#350

Post by iamacyborg » Fri, Jan 29, 2021, 4:36 PM UTC

cannabis_sam wrote: post #208

iamacyborg wrote: post #177

Earlier quoted context omitted.

You may want to check what happened to certain brokers on Jan 15th 2015 before you start chucking accusations out. It’s clear you don’t understand how these brokers work and how they interface with the broader market.

Is this the Swiss Franc thing?

Yep.