4 ms·
The part I don't understand is this: “Someone noted that these hedgefunds shorted 140% of all shares available.” How can you borrow a share that doesn't exist?
by hibbelig 6y ago
The part I don't understand is this: “Someone noted that these hedgefunds shorted 140% of all shares available.”
How can you borrow a share that doesn't exist?
- emteycz 6y agoWhen you're in bed with regulators, everything is possible. Of course normal people can't do it (as it should be).
- aahortwwy 6y agoBorrow a share. Sell it. Borrow the same share. Sell it again.
- mapster 6y agoIsn’t that manipulating the market by selling shares so the share price drops even more?
- miked85 6y agoBorrow a share, then let someone else borrow it from you.
- loandigger 6y agoNormally, when you short a share, your broker has to go find somebody who already owns it and they "borrow" it from there and allow you to "sell" it short. But if you can believe this, the very, very largest Wall Street firms, (Citadel, Sigma2, etc.) those with trillion dollar balance sheets got a special exemption from the SEC : rather than having to "find" shares to borrow, they can "manufacture" shares, using their massive balance sheets as collateral. This is how 140% of GameStonk can be shorted. It is this unfair playing field that r/wallstreetbets is fighting against. Since the short exceeds the float, it is possible that there could be an "infinite" short squeeze, that even if they took the company private by buying every available share, there would still be another 40% outstanding they would have to cover. HOLD!
- thefiregecko 6y agoDo you have a source for that special exemption? Or even just keywords I can search for?
- loandigger 6y agohttp://counterfeitingstock.com/CS2.0/CounterfeitingStock.html http://counterfeitingstock.com/CS2.0/CounterfeitingStock.htm...
- loandigger 6y agohttps://www.euromoney.com/article/b1320xkhl0443w/naked-shorting-the-curious-incident-of-the-shares-that-didnt-exist https://www.euromoney.com/article/b1320xkhl0443w/naked-short...
- mcv 6y agoI didn't know about this special exemption. I thought it was just that B borrows a share from A, sells it to C, and then D borrows the same share from C to sell it to E. That way a single share has been shorted twice, and both B and D need to buy that share to pay back the loaned share. So R quickly buys that share from E and refuses to sell it. Now B and D are screwed, because they both desperately need that share to pay back the loan that's about to run out tomorrow.
- perl4ever 6y agohttps://news.ycombinator.com/item?id=25935959 https://news.ycombinator.com/item?id=25935959
- aynyc 6y agoA has 1 share of GME. B borrowed it from A and sell to C. C has 1 share of GME. See, magically, A and C has 1 share of GME each.
- AnimalMuppet 6y agoThat's a lot like how banks create money.
- perl4ever 6y agoWhen the loans are repaid, it unwinds.