Tag: DTCC

AMC Becomes One of The Most Purchased Stocks

Market News: AMC becomes one of the most purchased stocks on Fidelity
Market News: AMC becomes one of the most purchased stocks on Fidelity

Wall Street is baffled as AMC becomes one of the most purchased stocks on Fidelity in the past week.

Mark Taylor from Mirabaud Securities says “the ‘smart guys’ are confused and fighting from a position of weakness.”

But has the retail community really been that covert?

The retail community has been fighting against market injustices for over a year now, which a lot has been an effort to drive short sellers out of ‘meme stocks’ such as AMC and GameStop.

‘Meme stocks’ have been suppressed by market makers and short sellers in order to prevent the stocks’ high demand from causing further losses.

It was reported AMC short sellers had lost more than $1 billion this year so far.

Are retail investors about to deliver another blow to Wall Street?

Let’s discuss it!

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AMC breaks $20 again

AMC Entertainment stock has broken the $20 levels again.

It’s going to have to hold well above $26-$27 if retail investors are to see it beyond $30 again.

AMC had peaked to $27.47 during the pre-market but underperformed like majority of stocks.

While trading volume in the past two days has been over 100m, today’s volume showed signs of cooling momentum.

Still, AMC is holding around $22.50 relatively well.

Shareholders are loading up on the stock prior to the new dividend distributions.

AMC will be distributing 1 APE stock for every 1 AMC share investors hold.

The new security will be tradable in the market and will provide the company with liquidity to pay down their debt and raise cash if need be.

For investors, a cash cow that may significantly grow in value.

This incentive is attracting more investors to buy the theatre chain stock and causing confusion amongst short sellers.

But there’s one thing mainstream media isn’t discussing, and that’s that retail activists and shareholders aren’t going anywhere.

Some folks truly don’t know

The retail community might have been painted as degenerates that originated from the Wall Street Bets Reddit forum and that what happened last year simply happened.

But that’s not the case at all.

The activist community has grown and has aimed at the SEC for its incompetence in market structure.

Marketing campaigns have sprawled on the streets of Chicago calling out Citadel’s Ken Griffin for market manipulation and Gary Gensler for allegedly being complicit.

Even the DTCC is under fire by retail investors yearning for change in the market.

The Depositary Trust & Clearing Corporation (DTCC) had its windows covered with flyers that read – DTCC, Disgraceful, Thieving, Complicit, Committee “allowing financial crimes under their watch”.

The market manipulation that has suppressed ‘meme stocks’ such as AMC for over a year now have prevented the stock from squeezing the big players from the game.

Loopholes have raised the attention of millions of investors who simply want to participate in a fair market where supply and demand dictate price action, not market makers and complicit regulators.

Some folks don’t truly know this, but this is a new breed of retail investors.

‘Meme stocks’ become beacons for change

So why are people becoming obsessive with stocks such as AMC and GameStop?

It’s because in today’s world, people are obsessed with real positive change.

For change in their daily lives, change in the financial lives, and change in the markets for the future generation.

Wall Street will very soon notice it’s time to pass the torch.

Finance is changing, culture is changing.

This is why AMC stock has become one of the most purchased stocks in the market.

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Phase 6 Margin Call Requirements on The Way

Phase 6 Margin Call Requirements
Market News: Phase 6 Margin Call Requirements on the way | ISDA

Market News: Phase 6 margin call requirements are on the way.

Institutions under UMR who had not previously been affected by these specific margin requirements will be as of September 1st, 2022.

Uncleared Margin Rules (or UMR) were created to address the OTC derivatives market–and its participants– in the wake of the global financial crisis (GFC) of 2008-2009.

It implemented new margin requirements for non-centrally cleared derivatives to avoid further systemic risk.

For this reason, they were ‘phased in’, or broken down by phases.

Institutions affected by phase 6 margin call requirements could find themselves in a sticky situation and I’m going to discuss why down below.

Let’s get started!

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Preparing for margin calls

The requirement to exchange initial margin for over-the-counter (OTC) derivatives is one of the last remaining pillars of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that remains to be fully implemented.

The five-year implementation period began in 2016.

UMR Phases - Phase 6 Margin Requirements
UMR Phases – Phase 6 margin requirements

The chart above depicts the number of counterparties affected throughout each phase.

Phase 5 occurred in September of 2021 where 319 counterparties were affected.

We will be entering Phase 6 in September of 2022, where 775/990 counterparties with more than the $8 billion scope detailed on the graph, or gross amount across all uncleared OTC trades, will be affected.

Phase 5 of UMR touched a mix of sellside and buyside firms, especially medium-sized banks and larger buyside firms.

However, Phase 6 is almost exclusively buyside-focused meaning we could potentially see a massive market rebound, per Bloomberg.

Institutions affected by Phase 6 margin call requirements may include asset managers, banks, hedge funds, and private family offices.

The entire process is extremely challenging according to Bloomberg.

But while it may seem complex in nature, it’s the results that truly matter.

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How long will it take for margin calls to happen?

Although Phase 6 margin call requirements are going into effect on September 1st, 2022, it’s important to note that this is going to take some time.

The derivatives market is massive, now boasting approximately 1 quadrillion derivatives as of May 2022, per Investopedia.

The Senior Principal at BNY Mellon has said in the past that even after Phase 6 there will be margin calls that will still have to be processed.

That’s how massive this event will be.

Phase 6 margin call requirements will begin to margin a variety of sized banks, hedge funds, market makers, and family offices.

The bottom line, the markets need this reset, and its coming.

For a much greater and in-depth walkthrough of what this event means, check out AMCBIGGUM’s video below.

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For You: Retail Investors Petition to Fire SEC Chairman Gary Gensler
Phase 6 Margin Call Requirements meaning

DTCC B16845-22: Are Margin Calls on The Way?

DTCC B16845-22
DTCC B16845-22 | Market News

On April 29, the DTCC released B16845-22 under the ‘settlement’ category.

The subject reads: changes to DTC collateral haircuts.

The notice is directed to all market participants and I’m going to touch topic on what this means down below.

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DTCC B16845-22 margin calls

DTCC B16845-22 says that affected participants may be margin called if they have reduced their collateral.

The reason being is that equities with reduced collateral value may significantly drop in price.

Stock prices over $10 will see an increase in margin requirements by 25%.

For prices between $7.50-$9.99 per share, margin requirements will increase by 30%.

There will be a 50% margin increase on stock prices between $5.00-$7.49, and a 100% increase on stocks with prices below $5 per share.

So, will DTCC B16845-22 affect AMC stock or GME stock?

Yes, since AMC is trading around $15 per share and GameStop is trading above $114.

Both these stocks will raise margin requirements by 25%, making it less accessible for short sellers to short the stocks.

However, as long as short sellers are able to meet margin demands, the heavy shorting will continue.

Why was this rule implemented?

The stock market has been facing massive selloffs as well as heavy short selling.

It’s possible DTCC B16845-22 was implemented as a way to cool off short selling, allowing the markets to catch a breather.

Some of the top CEOs in America have stated that they don’t expect this bear market to last long.

I don’t think anyone wants to see the U.S. go into another recession very soon.

While short sellers might have been able to profit from this market’s downside, I think we’re going to see more upside very soon.

What do you think?

Join the discussion in the comment section below?

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DTCC Makes Plans to Implement T+1 in 2024

T+1

The DTCC just announced they play to implement T+1 in the year 2024.

On February 9 the DTCC held a meeting to change the trading cycle from T+2 to T+1.

But is this change too far out?

I’m going to break down the benefits of T+1 as well as what the DTCC has to say regarding the lengthy time.

Also, what T+1 would mean for AMC and GME shareholders.

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What is T+1?

T+1, T+2, and T+3 refer to the number of days it takes for a security to settle after it has been traded.

T+1 means that if a transaction occurs on a Monday, settlement must occur by Tuesday.

Likewise, T+3 means that a transaction occurring on a Monday must be settled by Thursday.

We are currently on T+2 and have been since 2017.

So, what is T+0?

T+0 is a shortened settlement cycle where trades are settled the same day of transaction.

The DTCC recently argued that T+0 is rather complicated to achieve at the moment and is nearly impossible today due to how many orders flood the market daily.

They commented that as T+1 is implemented, they will monitor its progress to see how they may accommodate to T+0 at some point in the future.

When will T+1 happen?

DTCC T+1

The DTCC and SEC have established that T+1 will occur during the first or second quarter of 2024.

The DTCC is in favor of making this change in the first quarter of 2024 while the SEC feels like they will need more time and would like T+1 to go into effect during the second quarter.

T+1 is certainly a step forward; however, retail investors feel like this settlement day should be implemented sooner.

The DTCC and SEC agree that the process to implement this settlement day will require time.

Regulators have acknowledged that systemic risks may surface due to delayed settlement days, such as our current T+2.

Let’s talk about the risks of delays settlement trades.

Risks of T+2

Momentum stocks, also known as ‘meme’ stocks, proved last year when just how risky delayed settlement trades were when Robinhood ran out of liquidity to meet customer demands.

Robinhood is notoriously known for restricting retail investors from purchasing AMC, GameStop, and other ‘meme stocks’ due to liquidity issues.

The problem began due to delayed settlement trades.

So many orders were being processed and registered that by the time they were settled, liquidity had run dry forcing Robinhood to halt trading of these specific stocks.

The only problem here is that market makers are responsible for providing liquidity to broker firms such as Robinhood.

Robinhood makes money by sending retail orders to one of the biggest market makers in the world, Citadel.

Citadel at the time was losing billions from betting on AMC and GameStop.

This is where the Citadel and Robinhood scandal started, the day a losing market maker colluded with the broker to halt trading in order to prevent further losses.

Could T+2 be used as a copout for what occurred last year during the halts?

Be sure to leave a comment at the end of the article.

How would T+1 affect AMC and GameStop?

T+1 would not only affect AMC and GameStop, but it would ensure every stock in the market is settled one day after the purchase.

It would eliminate room for market makers to create naked shares during the settlement delay.

According to the SEC, in a “naked” short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard two-day settlement period

T+3 was removed years after the 08 crisis.

Now T+2 is scheduled to be removed three years after the ‘meme stock’ frenzy.

The change retail has been wanting to see is going to happen, but it’s going to take time.

As settlement trades get shortened, we can expect to see less risk in the market and less market manipulation.

Of course, there are still many predatorial strategies in the market that must be addressed.

Some of which include dark pool trading, off exchange trading, and short and distort campaigns where short sellers and media collude to drive the price of a stock down.

Related: How do hedge funds manipulate the stock market

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