AMC failure-to-delivers (FTDs) have been begun to rise again.
FTDs topped 6.8 million in February (non-cumulative), amounting to more than $36 million in failed to close orders.
The data is still being reported which means there’s a possibility we may see higher FTDs once February’s entire month has been processed.
FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.
These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.
In the case of sellers, it means not having the goods to meet that transaction.
Failure-to-delivers can occur in options trading or when selling short naked, per Investopedia.
According to Investopedia, AMC failure-to-delivers can also occur if there is a technical problem in the settlement process carried out by the respective parties (clearing houses).
Investors say there’s a major conflict of interest when Citadel Clearing LLC processes retail orders worldwide.
Are AMC’s FTDs a result of naked shorting?
Majority of the retail community seems to think so.
Companies are even beginning to take legal action against the predatorial short selling strategy.
GNS CEO Shares Petition to End Naked Shorting
Recently, Genius Group ($GNS) CEO Roger Hamilton shared a petition to end naked shorting in the market.
The Naked Shorts War activist urged the retail community to sign it in efforts to raise awareness of manipulative tactics that occur in the market every day.
“They’re predators. They’re doing something illegal, and we want it to stop”, says GNS CEO Roger Hamilton.
The Board of Directors of Genius Group Limited, a leading entrepreneur edtech and education group, approved at a meeting of the Board held on Wednesday 18th January 2023, an action plan to address illegal short selling of its stock.
AMC shareholders have criticized AMC CEO Adam Aron for not addressing the manipulation in AMC Entertainment stock.
This action plan includes creating a Board-led ‘Illegal Trading Task Force’ to actively pursue all possible actions together with the regulators in their discovery and prosecution of persons engaging in market manipulation involving the ordinary shares of Genius Group.
Waging war against naked shorts is something that won’t succeed so easily, but raising awareness is a sure way to start.
Are All AMC FTDs Caused by Naked Shorts?
SEC Chairman Gary Gensler has said in the past that FTDs aren’t always the result of naked shares — but that’s as much as he’s mentioned the term.
FTDs can also result in buyers not having the funds to cover costs during execution of a security, though for retail investors this is a very unlikely scenario.
The stock market has seen its fair share of manipulation throughout the decades.
Institutions can spoof the market with ‘naked shares’ to move the price without ever having to take accountability for any real asset.
They can also lend shares they don’t own as IOUs and never have to take accountability when it comes to delivering them but rather simply reporting them as failure-to-delivers.
So, there are certainly loopholes our regulators must take into account.
And as far as the retail community is concerned, our regulators know all too well what’s occurring in the market.
Putting pressure on these regulators could be the first steps towards creating real change in the near future.
Retail investors might just be the ones to make history this decade.
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