Oct. 29, 2022
October 29, 2022 Failure to delivers are constantly going undelivered with essentially 0 real consequences, the consequences are low enough to be considered a cost of doing business and it is beyond harming actual trade price discovery. Short selling while intentionally FTDing is completely eradicating the definition of price discovery. There is no actual price discovery with the rules in place now, it just gets dismantled. Below is an excerpt I completely resonate with. The SEC website states that securities loans are transactions that are vital to fair, orderly, and efficient markets. This is simply not true. Securities lending enables the multiplication of shares in circulation. When brokers lend the shares being held for retail investors, for example, it is equivalent to replacing the bought and paid for shares with an IOU. Securities lending ignores the investors right to vote in matters of corporate governance and to receive tax-qualified dividends. Further, a fail-to-deliver (FTD) that is closed with a borrowed share is not really closed it leaves open that IOU with the lender. Therefore, securities lending harms market efficiency by inflating the number of shares in circulation, which hampers true price discovery by artificially increasing supply.