There is considerable school of thought developing, that particular broker dealers Desk investor orders on receipt as routine operations. We all know that one feature of the current market is its speed of execution. In studies i have been working on i will place an order to buy at market and mysteriously get filled within seconds. Yet in many cases there was nothing on the bid or the ask, and the volume may or may not end up showing on the volume ledger.
Desking describes the above conditions better than anything else. Under a desking operation, the broker dealer does not intend to locate the shares, and creates a synthetic short position, without the feedback for actual transactions, my order becomes just a ledger entry, that may or may not ever be recorded accept on cross referenced ledgers so they are sure to send me proxy material, annual reports or what ever notices are required.
Much of the market action we see everyday reduces to the above described behaviors. Under disconnected supply and demand, the broker dealers can sustain unlocated ledger entries for long periods of time, and these ledger entries may or may not ever get located because the account holder may sell much lower taking a loss.
The SEC must reinstate and emphasize the laws governing stock issuance, floats are relative constants and thus ae very measurable withing the context of time.
Broker dealers have potentially recognized that without a feedback mechanism, desking operations become standard practice.
Short and naked short entries are demands for future stock. they work within a free float ledger as contributors, they are reports about status of forward demand.
The art of the operation therefore is to facilitate the price artifact in the direction of need. Which is why so much of the market is now under the boot facilitating closure of some portion some of the imbalances made possible under disconnected supply and demand.
When large shorts cover lower, accept retail shorts like you or me, the system is conducting an operation to its purpose, and clearly in violation of the laws governing stock issuance.
In a true free market the float is the center of the market, it represents the only legal supply. Derivatives can arbitrage the relative float constant but only for a limited time window.
The challenges of resolution are legion, unless broader agreement is reached about the causal agents of interconnectedness favoring only systemic interests.
Investors are going to need to proceed to direct registration with Investor relations departments, building a sum of known ownership within management that allows management to feed back systemic observations about market contrivances as they are. We can only hope that CEO's will invite thier own investors to register Investment securities with the company in order to begin creating a feed back mechanism.
Other wise, the market is just one big desking operation.
Today on this Thanksgiving Day, the desking artists, have much to be thankful for....investors on the other hand, have this much, to think about. |
