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I'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
by seabird 5y ago
I'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.