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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (3842)	11/19/1998 3:53:00 PM
From: Eric P	Read Replies (1) \| Respond to of 4969

Peter: You said that: Yes, but how is the timing of the buy-in determined? As you say, CNS needs those shorts for delivery, but when did they know they would need them? Doesn't settlement time come into play here - T+3. The lender of my shares (so to speak) sold them (we assume here) and had to deliver the shares in three days. So why could I not get three days lead time to return them to the lender, so that lender could then deliver them to CNS? I believe that your reference to the three day settlement delay would work against you, as well as for you => Netting no benefit. Let me explain... Assume that the customer (from whom you borrowed the stock from) decided to sell his long shares of XYZ today. CNS would not have the stocks to return for his settlement in three days because you have already sold those shares to someone else. Therefore, they insist that your broker return the shares with a deadline of three days from now. The only way that this would be possible would be to buy back your shares today, so that the shares could be received by your broker at settlement in three days and returned to the original owner of the shares for their settlement on the same day (three days from now). The point? Well, that means that you would not be able to "work" your covering order beyond today, if you needed delivery by three days from now. I am now familiar with how brokers usually handle this type of situation and what recourse they may have to protect their customers (like you), but I do agree that it sounds like your broker could have and should have handled the situation better. Good Luck, -Eric