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This is absurd. If you make a bet that you're unable to honor which forces you to shut down the market, you've lost control. If they can't account for this th
by MegaButts 4y ago
This is absurd. If you make a bet that you're unable to honor which forces you to shut down the market, you've lost control. If they can't account for this then they can't account for the trades they're supposed to honor.
Yes, it's literally their job to account for situations like this. They failed. Pointing out how insane the situation was only points out how poorly they predicted what might happen with private information they still haven't shared publicly. If they can't account for the bets placed then we don't have functioning markets. They knew what the short interest was, they knew what the options chain was, they have data about trades the public can't even see. There were multiple traders pointing towards a potential short squeeze in GME going back well into 2020, so if they could see it why the fuck couldn't the DTCC?
Your stance is "their job was hard therefore it's not their fault." That's quite frankly batshit insane when we're talking about the stock market which is an enormous functioning part of our economy. Yeah man, I'm concerned they don't know what the fuck they're doing because they've already proven they don't. If they didn't care they wouldn't have changed the collateral requirements - you're contradicting reality with your argument.
You can have the last word, I'm not going to respond any further.
- seabird 4y agoI'll go ahead and have my last word: - A clearinghouse cannot halt a market - A clearinghouse's job is to ensure that trades settle, which requires adjusting collateral, which is exactly what they did - A clearinghouse does not honor a trade, the buyer and seller (via their brokerage) do; if there's an increased risk of the trade not being honored, the clearinghouse raises collateral requirements - DTCC controlled the situation the best they could from their end by raising collateral requirements, which is basically all they can do - A market can be functioning perfectly fine even if clearinghouse collateral is at 100% - A clearinghouse doesn't definitionally know what the outstanding short interest is; short positions are on broker's books and it is the broker that reports that data to FINRA, not the clearinghouse - A clearinghouse preemptively "dealing with" with all outstanding options positions (or any position, for that matter) that they (there is not just one clearinghouse) know about boils down to collecting 100% collateral - The OCC clears options, the DTCC (by way of the NSCC) clears equity; the data that the DTCC has regarding options is presumably very limited - A clearinghouse is not going to require 100% collateral because somebody on the internet believes there's going to be a short squeeze - I don't exactly know what you think you think they "don't care" about, but if you're implying that a clearinghouse requiring high collateral to deal with brokers not being able to make good on a trade because of activity on that broker's books is somehow rigging the market, you've completely lost the plot I think you misunderstand what a clearinghouse does.
- MrMan 4y agoyou should learn from the seabird, instead of railing against stuff you dont understand.
- MegaButts 4y agoWe both think the other is an idiot. I'm going to trust my friends that are securities lawyers and professional traders over an internet stranger regurgitating commonly held misunderstandings on how the market works. Believe whatever you want.
- seabird 4y agoFor whatever it's worth, I don't think you're an idiot. It just sounds like you think a clearinghouse can do a lot of things that they cannot do.
- MegaButts 4y agoI apologize for calling you an idiot - that was a bit much on my part. I still disagree and don't want to continue the conversation, but saying "you don't understand" is different from an accusation that you're incapable of understanding. Agree to disagree. Cheers.