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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today
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To: Bill France who wrote (15801)4/23/1999 6:45:00 PM
From: Colin Cody  Read Replies (2) of 19331
 
USA citizens generally can not borrow non-marginable (or unborrable) shares with which to short (see the hypothecation clause in your margin agreement). This is a USA rule, which USA brokers abide by.

This rule is GENERALLY, big money of course can do anything they want to do (i.e. special negotiated borrowings), and "certain" Market Makers can have and do have unbalanced books because "nobody checks."

OUTSIDE of the USA the local rules apply, and in many places they couldn't care less if a seller ever shows up with the shares to cover a sale to deliver. (delivery vrs payment issues)

That is unless the "other side" with a "sale to receive" on his books demands delivery. But even that has a work-around. This is called a "rolling short position" and can be often identified buy observing two large blocks of stock passing the tape, one a "covering of the short position" and the other being a new short sale. This kind of game can go on indefinitely.

To break the rolling short chain you need to make it profitable for the shorter i.e. the stock craters and he covers, or you need break the shorters bankroll. Either way this is what we almost accomplished here late last year, until relentless retail buying appeared and saved the shorts from ultimate ruination.

Colin
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