AMC has spent 20 day on the threshold list between February 2nd and March 2nd this year.
What is the NYSE Threshold Securities List?
A threshold security protects stocks that have had 5 consecutive settlement days in a clearing house as “Fail-to-Delivers“.
One of the last times we saw AMC make the threshold securities list was in June of 2021 — yes, the same month the stock surged to its all-time high of $72 per share.
Protection from the SEC also requires that the stocks FTDs total more than 10,000 shares.
AMC failure-to-delivers are skyrocketing through the roof this year.
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.
Why is AMC Being on the Threshold Securities List Important?
A threshold security comes with regulations that heavily play in retail’s favor.
One of the regulations is known as rule 204.
Rule 204 requires brokers and dealers that are participants of a clearing house to close out failure-to-deliver positions.
Yes, you read that correctly.
Here is the source straight from the SEC’s “key points” under III. Regulation SHO.
“Closing out requires the broker or dealer to purchase or borrow securities of like kind and quantity.” – SEC.
- It’s a win-win situation for retail investors. If hedge funds continue to manipulate the market and generate FTDs then they’ll be obligated by law to cover the millions of dollars and shares they’ve been failing to process.
- On the other hand, if shorts begin to properly exercise contracts then we will begin to see momentum pick up rather quickly from executed trades. This too can create several gamma squeezes due to the amount of volume being pumped into the market.
Short sellers only seem to keep getting themselves in a bind.
Eventually, the only way out plays in retail’s favor.
- NYSE Threshold Securities AMC List – visit here
- SEC Key Points About Regulation SHO – visit here
- Threshold Securities – Investor.gov – visit here
- Threshold List Definition – Investopedia – visit here
Curious to hear your thoughts and opinions on this.
Leave a comment down below.
Market News Published Daily
For stock market, business news and updates, join the newsletter to receive weekly market news and notifications straight to your inbox.
Franknez.com is the media site that keeps retail investors informed.
- Gain access to EXCLUSIVE FrankNez articles you won’t find here.
- Become part of a private and safe Discord community, just for retail investors.
- Get drawn at the end of the year for holiday giveaways.
Recommended For You ✨
- Bank of America is Freezing Accounts in New Scandal
- A US Bank is Now Denying Customers Access to Money
- Banks Are Now Closing Thousands of Accounts Daily
- Chase Customers Now Unable to Access Money Through ATMs
- Wells Fargo is Now Freezing Bank Accounts in New Scandal
- The US Treasury Direct is Now Freezing Customer Accounts
My New Book is Out Now! Use Code: THENEZ