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No they can't. They can keep a short position but that isn't failure to deliver.
by wbl 2y ago
No they can't. They can keep a short position but that isn't failure to deliver.
- slt2021 2y agothe T+1 timer can be easily reset every day, until the market price reverts back to the Citadel's modeled price at which it is profitable/least losses for them to send order to lit market
- toast0 2y agoWhat are the mechanics of that? Let's say I buy a share of F on Monday, my brokerage routes it to Citadel, because PFOF. On Tuesday, I expect to get a share of F delivered at close of business, because T + 1. If Citadel doesn't deliver on Tuesday, what happens? Are you suggesting they would continue to not deliver the share I purchased for several days, by saying oh yeah, we'll get toast0 his shares tomorrow? That would be pretty upsetting, and I imagine I'd call my brokerage and ask them why they're dealing with Citadel if they never deliver shares on time.
- slt2021 2y agoyou will receive share in your name in a database, but physically it will be stored "in the street name" in the depositary house, of which there is only one. plus even if there is only a single share authorized for stock exchange, there will be more than one in the float, due to synthetic shares: created when shares are borrowed and then reshorted, created to support derivative market (selling calls and buying puts). ALso borrow/rehypothecation mechanics is recursive, since shares are fungible, I can recursively re-borrow and re-short the same share, creating synthetic shares out of thin air, supported by nothing other than some bytes in the database somewhere, and not physical shares https://news.ycombinator.com/item?id=26011135 https://news.ycombinator.com/item?id=26011135
- wbl 2y agoThe prime broker has a lot of money and will cover their customer blowing up in a net short position. They manage that with margin agreements. That isn't nothing.