Eliminate Naked Short Selling in U.S. Stock Market

[Law_Paw (Lawrence Bunnell, PhD)]

Eliminate Naked Short Selling in the U.S. Stock Market

I propose that the following # policy proposals, about eliminating naked short selling of stocks, get merged:

1. Eliminate Naked Short Selling

Written by @LawPaw

Eliminate Naked Short Selling

To effectively put an end to naked short selling and restore market integrity: Institute comprehensive daily or weekly reporting of all short positions to increase transparency. Enforce stringent financial penalties for any failure to deliver securities, encouraging compliance. Reduce settlement periods drastically to T+1 or even same-day T+0 to limit the time for manipulation. Require brokers to secure a ‘hard locate’ or actually borrow shares before initiating a short sale, ensurin…

#2. MMTLP policy (Stop Naked Short Sales)
Written by @rbh

MMTLP policy (Stop Naked Short Sales)

Proposal for Congressional Policy to Address Naked Short Selling. Making Markets Transparent Legitimate and Principled (MMTLP Policy) Executive Summary: Naked short selling—essentially the counterfeiting of stocks—is eroding trust in our financial markets and jeopardizing the retirement accounts of countless Americans. The case of ticker symbol MMTLP serves as a stark illustration of the pervasive issues linked to these practices. This proposal advocates for a congressional hearing to investi…

3. Policy Proposal for Banning Naked Shorting and Overhauling the DTCC

Written by @donttreadonme

Policy Proposal for Banning Naked Shorting and Overhauling the DTCC

I. Introduction This policy aims to address the longstanding issues related to naked short selling and the operational inefficiencies within the Depository Trust & Clearing Corporation (DTCC), ensuring that all securities transactions reflect actual share ownership, not merely IOUs. II. Key Provisions A. Ban on Naked Shorting: Definition: Clearly define naked short selling as the act of selling securities short without first borrowing the securities or ensuring their availability for deliv…

4. Ban Naked Shorting of US Stocks

Written by @BcAZ

Ban Naked Shorting of US Stocks

Proposed Bill: Ban on Naked Short Selling Naked short selling, a manipulative practice that undermines the integrity of financial markets, should be permanently outlawed. This tactic allows traders to sell shares they do not own or have not properly borrowed, resulting in a failure to deliver (FTD) on those shares. FTDs distort the true supply and demand dynamics, causing artificial price movements that can harm investors, particularly in volatile markets. By permitting this practice, brokerage…

Explanation & Justification

These policy proposals are all aligned in a call for the elimination of naked short selling in the U.S. Stock Market and a single policy proposal would streamline efforts, making it easier for legislators and regulators to focus their efforts on one comprehensive reform rather than multiple, potentially overlapping initiatives.

The primary policy should be “Policy Proposal for Banning Naked Shorting and Overhauling the DTCC.” Here’s why:

• Comprehensive Approach: This proposal not only bans naked short selling but also seeks to reform the underlying systems. This addresses both the immediate problem and the structures that might enable such practices, which is in line with regulatory efforts to enhance market mechanics and reduce manipulation.

• Enhances Enforcement: By merging all these proposals into one, the policy would combine the enforcement mechanisms, transparency requirements, and legislative actions proposed in each. This would create a robust framework where:

  • The ban on naked shorting would be the core legal change, directly tackling the issue as highlighted by the SEC and other regulatory bodies.

  • Overhauling the DTCC would prevent systemic abuses that could facilitate naked shorting, aligning with the need for systemic transparency and accountability.

  • The specific case studies like MMTLP could serve as examples in legislative hearings to underscore the real-world impacts, supporting the push for these changes.

• Educational and Public Awareness: A merged policy could incorporate public education on the implications of naked short selling, which is crucial for market transparency and investor protection.

• Global and Historical Context: Given the global regulatory moves against naked shorting post-2008, this policy would be in step with international efforts to curb market manipulation while addressing uniquely American systemic issues like the operation of the DTCC.

[donttreadonme (Steve)]

Thanks!