Auric, There's no CRIMinality whatsoever in above market buy ins. It's supply and demand at its finest.
If a BD (BD) is short 10,000 shares of XYZ and he's required to deliver those 10,000 certificates by the end of the trading day, what's the procedure if the certs are hard to come by?
Here's my answer and I'd like to hear yours: BD calls all the MMs requesting the purchase of stock with deliverable certificates. No one has any except the 10th MM. 10th MM (10th) says he'll fill the order, but at $3 above the current offer. 10th doesn't twist BD's arm. BD doesn't have to accept the deal. He's welcome to shop around. BD may elect to go into the market and lift 10th's offer and hope 10th doesn't move away or move up too much. 10th may sell the minimum and move up $1 or $2 each time his offer is taken out. By the time BD has accumulated his 10,000 shares in the market, he may have an average cost that's $3 or $4 above where he could have bought the block of XYZ that was offered to him above the market.
This is the result of a free market economy and one of the hazards of selling a stock you don't own. There's nothing CRIMinal about it. No one forced BD to short the stock, it was free will. No one forced BD to take the deal that 10th offered him, it was free will. BD determined what was best for his firm and made his own decision, right or wrong.
This isn't a problem for John Q. Public. This is a problem between Market Makers. MMs should know the rules before they play the game. Shorting can be a very painful business and it's proven painful for numerous MMs playing this game. This is another reason I strongly believe you're associated with a BD. JQ Public has no concern here, but you obviously do because you continue to push the subject. The reality of the subject is.........there's only one CRIM here and this post is addressed to him. You've violated the rules of the SEC and the NASD numerous times. That's a certainty!
Come on, you and I both know who A _ _ _ _ _ _ _ r is. As you know, the blanks between the A and the R are correct. If I were you, I'd move back in the shadows and off the thin ice.
Best of Luck, Greg |
