$1 Trillion of Unconfirmed Trades

In Let’s Just Grandfather it!, I said

Bottom line: 1.5% of daily trading or $6 Billion daily is involved in naked shorting. The Feds called a meeting of the top 14 firms involved in derivatives, suspected of “unconfirmed trades”. Short sales after Jan 3rd, 2005 must be settled after 13 days or the firm is obligated to buy the shares in. Naked short sales prior to Jan 3rd are grandfathered, basically told to sin no more.

From JSMinset we learn that

Fourteen of the largest derivatives players are likely to report that they are on track to meet an end of April deadline in resolving half their trade confirmation problems when they meet for the second time with the New York Federal Reserve on Thursday.

So, if these 14 firms that met on Sept. 15, 2005, had FTDs prior to Jan 3rd, 2005, there is no requirement to deliver or close the transaction. After Jan 3rd, 2005, there is a 13 day requirement to deliver wheich was not being adhered to as of the meeting with the Fed oon Sept. 15, 2005. It is heartening to know that 30% were brought into compliance at the end of January and a total of 50% will meet the April deadline. That leaves 50% of of $6 Billion of daily naked shorting not yet in compliance. That could be as little as $1 Trillion of naked shorting that is not in compliance.

naked shorting FTDs Mover Mike

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