Tag: NSCC

Market News: NSCC-2022-003 Approved

NSCC-2022-003
Stock Market News: NSCC-2022-003 has been approved

NSCC-2022-003 has been APPROVED.

The filing replaced NSCC-2021-010 which was withdrawn on March 25th of 2022.

The rule aims at providing a more stable environment for market participants and I’m going to break it all down below.

Let’s get started.

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NSCC-2022-003 SFT clearing service

NSCC-2022-003 would implement the SFT clearing service (securities financing transactions).

This means the NSCC would act as a third party to clear FTDs (failure-to-delivers) from various institutions.

The NSCC would also collect margin from both the lender and borrower to mitigate any risk.

Here the NSCC essentially acts as a referee, preventing overleveraging, naked shorting, and FTDs in the market.

Predatorial short selling strategies could potentially be eliminated due to this filter.

The NSCC believes it can reduce market disruption from fire sales by liquidating positions in small batches.

I’ve stated in recent articles and on my channel that a squeeze in AMC and GameStop will likely occur in sequences.

A ‘controlled squeeze’ so to speak to avoid systemic risk in the market.

It’s very possible NSCC-2022-003 was created to unwind this mess in a manner that would prevent the stock market from collapsing.

Does the rule help hedge funds?

Yes, but it also helps retail investors.

While NSCC-2022-003 provides a safety net for overleveraged institutions, it will also create more balance in the market for retail investors.

The NSCC is requiring all SFT members to provide a $250,000 margin minimum amount.

And with DTCC B16845 already raising margin requirements, I think it’s fair to say hedge funds are being put on a leash.

Investors have been asking me, what happens if a hedge fund defaults?

Will they be held accountable for their short positions?

Assuming a hedge fund becomes an SFT member, under NSCC-2022-003, the NSCC would take all responsibility and be obligated to meet all settlements.

Although the proposal requires a $250,000 margin minimum, the NSCC is requiring members to hold sufficient liquidity to cover the largest settlement obligation.

In other words, every short position will be obligated to get closed.

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Related: Is a New AMC Stock All-Time High Coming Soon?

NSCC-2021-010 Prevents Naked Shorting and FTDs [Canceled]

NSCC AMC
NSCC-2021-010 AMC News – NSCC 2021 Canceled

The NSCC is taking accountability as a third party between lenders with the NSCC-2021-010 proposal.

We now have a referee in the market saying everyone needs to play fair.

Will it be implemented anytime soon?

Here’s what’s going on.

Update: this proposal will be filed on August 23rd and effective on August 24th per this FINRA letter, page 3.

Bookmark this page for additional updates.

Update: The proposal was delayed for November and was delayed again on November 5th, 2021.

Update: On March 25th, 2022, NSCC withdrew the proposed rule change (SR-NSCC-2021-010) detailed below.

This article will stay up for archive purposes. You may read the original text below to see how this proposal would have affected short sellers and retail investors. Leave a comment below with your thoughts on the cancelation of this proposal.

franknez.com

Welcome to Franknez.com – the blog that fights against FUD media. Today we’re discussing a rule that could potentially help retail investors against market manipulation.

Let’s get started!

(ARCHIVED 2021) | Updated March 30th, 2022.

Although this proposal has been delayed a few times, I’m going to go over the significance of it if passed.

We must urge regulators to pass this proposal because it will level the playfield for retail investors.

What is going on with the NSCC essentially cleans the slate for retail investors.

The AMC community will now be able to drive AMC’s share price without illegal tactics in the stock market if this proposal is passed.

All the opposition that prevented AMC Entertainment stock from reaching $100 per share will no longer be able to drive the stock down if this goes through.

As a result, the momentum that retail investors create will bring higher and quicker upswings in AMC stock.

Breaking away from $30-$40 range

Like many potential catalysts, this could very well be one that could wipe out more hedge funds.

Is this why Anchorage Capital threw in the towel?

NSCC-2021-001 is a major threat to hedge funds.

Why it’s been delayed for several months is beyond me, this proposal should have gone through during the summer.

All retail investors need to gamma squeeze AMC at this moment is to bulk up on the stock, we’ve known this.

However, short sellers have increased their dark pool trading usage and OTC trading strategy as well.

These illegal backdoors have allowed hedge funds to heavily short AMC stock through a rinse and repeat process retail investors have no control over.

Well, the NSCC is stepping in to take accountability for every transaction being made in the market.

The NSCC will act as a third party to oversee transactions between lenders to stabilize the stock market.

This means the markets will not be as volatile.

And this is all possible due to proposal NSCC-2021-010.

But more on that in a moment.

Time to play offense

Rocket Ship

Right now is the perfect time for retail investors to go on the offense.

By driving AMC stock up, short sellers will further accumulate heavy losses on paper.

Charles Schwab have already raised margin requirements for both AMC and GME stock.

JP Morgan on the other hand is implementing intraday margin calls up to 7 times per day to ensure short sellers have enough cash at hand to cover their positions.

This puts short sellers in the most extreme condition they’ve ever been.

That’s because the more money they lose on paper means the more money they’re being expected to fund their margin accounts with.

And with the feds now stepping in, margin requirements are about to get a whole lot higher.

Before, they were able to short the stock down to avoid immediate liquidation.

Now, proposal NSCC-2021-010 prohibits short sellers from creating failure-to-delivers as well as naked shorting!

NSCC-2021-010
Source – NSCC-2021-010 Naked Shorts / Failures to deliver (page 4.)

This means they can no longer short AMC stock in extreme measures using naked shorts like they have been.

The FTDs? All call options in the money should now be properly executed which will result in gamma squeezes that will drive up AMC stock up; breaking the $30-$40 range.

If you bought in during AMC’s climb, you’re about to break even real soon.

And once you do, you’re going to begin seeing profits on paper shortly after.

The NSCC is going to watch every transaction

The NSCC has the potential to take away the enemies’ weapons and now it’s time for retail investors to charge full on.

If this proposal goes through, hedge funds will be stripped from their power to manipulate AMC through naked shorting and FTDs.

Short sellers now cannot take another massive round of momentum.

This momentum could cause immediate liquidation by brokers if margin accounts fall short of requirements.

A third wave of momentum will eliminate more hedge funds shorting AMC and could potentially spark the MOASS.

The NSCC requires collateral

NSCC-2021-010 Market Regulators Preventing Naked Shorting and FTDs

If that wasn’t enough, the NSCC-2021-010 also requires that lenders have the collateral at hand when trading stock.

So now hedge funds have JP Morgan, Charles Schwab, and the NSCC requiring them to keep an insane amount of cash at hand for once they get squeezed out of their positions.

NSCC cash collateral AMC
NSCC Cash Collateral – Source, page 11

The NSCC essentially plans to make sure everyone’s money is there before positions begin to get liquidated.

This cash collateral is going to prohibit short sellers from overleveraging their positions.

You take out overleveraging, and you take out the excessive manipulation in the market.

From this perspective, the biggest thing hedge funds fear the most is extreme volume from the community again.

We’re talking about executives selling their cars, homes, properties, assets, you name it; to keep their margin requirements up.

Will it get to this point?

Not unless short sellers close their positions now.

Hedge fund scrutiny intensifies

hedge fund scrutiny

Hedge funds have been under extreme scrutiny recently.

Democrats have even begun broadening consequences for hedge funds causing disruption in our economy.

In fact, if the Capital Markets Engagement and Transparency Act passes, hedge funds would be required to publicly disclose their bets against stocks as well as dark pool data.

The SEC cracked down on 27 financial firms for FTDs earlier this summer.

And although Citadel was not on that list, the feds are investigating them as well as Robinhood for market manipulation.

There might have been a point where it felt like short sellers had the upper hand in the markets but not anymore.

Retail investors now have the SEC, NSCC, and the Feds auditing the financial system.

The AMC community is forcing change.

I’ve said many times before.

It’s you as an individual within the community that has so much power to make things happen in the real world.

The AMC community and the movement will be recorded in financial history.

The financial system is not perfect, and neither are its regulators, but one step forward is better than none.

Proposal NSCC-2021-010 Canceled

franknez.com

This article will stay up for archive purposes.

The cancelation of this rule does not change the short interest data or possibility of a short squeeze.

And although the article’s initial context was very positive, the community has the power to raise awareness of the injustices in the market.

Leave your thoughts in the comment section below.

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Read: Anchorage Capital closes after betting against AMC stock


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