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To: tyc:> who wrote (60473)	7/22/2008 2:55:49 PM
From: bull_dozer	Read Replies (2) \| Respond to of 78438

404.gov Has this changed? "B. Regulation SHO's Close-Out Requirement" Or is it not being enforced? Just trying to understand "naked shorting"...

To: tyc:> who wrote (60473)	7/22/2008 6:14:04 PM
From: LLCF	Read Replies (1) \| Respond to of 78438

<1..A client (you or I) wishes to short a stock so using direct access he enters an order to short it.> Yep <2. Seeing that there is sufficient margin in the account to cover it, the computer makes the sale.> I'd be surprised if any major retail house didn't have sweeping restrictions based on price of the issue, average volume, and shares outstanding AND THEIR HARD TO BORROW LIST. Who is your broker and have you tried to short small hard to borrow stocks??? I bet it's impossible to find a broker that allows shorting whatever you see on the screen... if so enlighten us. These guys have enough to do without letting putzes blast away shorting stuff that the firm is liable for. Please prove me wrong. <4 Later the broker has to settle the sale. He settles it simply by taking shares from his available inventory, which is how he settles all his sales.> I'ts not at all how he settles ALL of his trades. If you sell a stock on any exchange there is THE OTHER SIDE OF THE TRADE!! Your version is only true for trading with a MM, that is short, on the other side AND IS PART OF A MAJOR HOUSE WITH STOCK LOAN... there could easily be Schwab on the buy side, Merrill on the sell OR a MM that is long the shares alrady OR a MM firm that doesn't have stock loan (lot's of 'em) for example. We cleared Merrill Lynch, did orders MOSTLY with other firms (none of which would fit your scenario) and EVERN WHEN we (example) sold shares to a Merrill customer (Merrill to Merrill trade you mentioned) we were ALSO a CUSTOMER of Merrill Lynch and treated the same (worse)... so even in that case we NEVER (it was impossible) for us to take shares from other clients of ours... we didn't have any. AND WE ALWAYS HAD TO BORROW SHARES ... AND we couldn't even INPUT short orders in things on the hard to borrow list... the freakin machine wouldn't take 'em! And if anything slipped through we got a phone call immediately. Granted... this is Merrill Lynch... they're very professional. Don't know about others. <Well my version of what actually happens is this:>> Yes, clearly YOUR version. Another thing...the advent of online cheap trading IS BECAUSE brokers (by farming out order flow or MM themselves) are taking money from the "spread" instead of giving the specialsts on the exchanges all the cheese. Most people don't credit this boon to the explosion of MM firms, which also by the way have CRUSHED bid offer "spreads" making getting in and out a FRACTION of what it used to be. BECAUSE of the MM's competing with exchanges it's practically FREE to trade nowadsy!! It allowed me to trade from Canada linked through Chicago as a NON market maker... the MM business margins have collapsed. DAK