| Author | Source | |
|---|---|---|
| u/Bye_Triangle | Susanne Trimbath PhD |
| [Education đ¨âđŤ | Data đ˘](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Education%20%F0%9F%91%A8%E2%80%8D%F0%9F%8F%AB%20%7C%20Data%20%F0%9F%94%A2%22&restrict_sr=1) |
THIS IS THE SECOND PART, SEE PART ONE HERE:Â https://www.reddit.com/r/Superstonk/comments/n1vubv/stonky_news_special_report_dr_susanne_trimbath/
Dr. Susanne Trimbath AMA Transcription. Summaries, supporting materials, punctuation and memes brought to you by u/Bye_Triangle, u/Luridess, u/Leaglese & u/Cuttingwater_
THE EVIDENCE
Atobitt
So, right there at the top more than â of companies receive more votes than shares that are outstanding.
That is direct evidence of what we are talking about here. Now I want to really drill into the FTDs.
The âopen positions dueâ to the NSCC, and these are quotes from your book, 3.4 billion open positions due to the NSCC, open position to buy participants with the NSCC was 2.45 billion, that results in open total fails 5.8 billion in 2005 or?
Dr. T
Atobitt
Dr. T
Atobitt
Dr. T
Atobitt
Dr. T
Itâs a multiple something, a fraction of something, so when I look at the $183bn open positions, I want to go look at the Clearing Fund, because if that $183bn doesnât show up, itâs the Clearing Fund that NSCC would draw on to cover that.
So thatâs, for me, thatâs the denominator. Like I said a multiple or fraction, in the 03, 04, 05 if there were 40x if the FTDs were 40x the Clearing Fund if those fails really fail there is no way âŚ
Atobitt
TL:DR đŚ Summary:
The direct evidence of naked shorting exists and remains today in that over â of companies receive more votes than are actually outstanding.
FTDs have been classified in a new way, âopen positions for which a trade guarantee is appliedâ and on Atobitt pulling the same report Dr. T did at the time of her book, the problem has risen from a $4bn problem to a $183bn issue.
Dr. T explains she is not surprised the problem has grown to this extent, owing to the advent of ETFs, Mutual Funds, and increased trading, etcâŚ
Dr. T warns all apes that you need context, like a denominator (her example, the Clearing Fund) in order to contextualize and understand your DD and appreciate the bigger picture.
GET OUT OF JAIL FREE
Atobitt
Weâre gonna talk a little bit more about these DTC proposals that have come out, I really wanna pick your brain on those.
Yeah, that jump from to $184 billion was up $40bn alone from 2019, to your point about the Clearing Fund. Another point you illustrated in your book, was keeping the ratio or the volume of stock thatâs being traded on the NYSE, and as a comparison showing, we have a volume increase for a period between â99 to â03 and â03 to â06, 3 years to 3 years, the volume of total trades increased by about 29%, for the same time frame, a 95% in FTD
Dr. T
So, I never met a number I didnât like. Let me get a bit more math-y with you, so when reporters would go to DTC and say hey, why is the volume the value of fails gone from $5bn to $183bn?
âWe do more trades.â âTrade values are rising.â Bought as a percentage of transactions, processes still are a fraction of 1% but what Iâm looking at is what is that change across time?
So, if trade volume is the deal so fails are going up, then the change in trade volume should parallel this somehow, but itâs just not there
Atobitt
Itâs just not there. To the point that you just brought up about that clearing fund, to the people that have been following my posts and your book talked about FTDs jumping like 1000% or 100% I also noticed these liabilities and assets going up, Citadel was somebody hard not to ignore in Citadel Has No Clothes, I donât think you actually reviewed that, but the point Iâm trying to make is that asset side, or liabilities side has jumped 100% the assets are held by the DTC who are supposed to cover those.
Also looking at the Clearing Fund balance of the NSCC, we have another 100% jump so in 2019 we had a Clearing Fund balance of $4bn but the 2015 Clearing Fund balance is just under $13bn and there was a 119% jump from 2019-2020 alone.
So we talked about the amount being held to cover these shorts, and they say well we will have fewer failures if we just have a bigger deposit account.
Dr. T
Well, thereâs a relationship between the two now right so in, so in the comment leading up to the 2008 financial crisis, um I um, made the points in several places that what we just talked about, the Clearing Fund was a fraction of the fails right, that the risk in the system was enormous, to know that was, you know, because thatâs, you know they are too big to fail, status, right?
Okay so after that
Atobitt
Dr. T
Right, so probably in, Iâve forgotten the year as I said, so probably 09 2010, something like that, prior to that there was no calculation for the Clearing Fund that included fails.
So it was a big foreign activity, the more trades you did, the bigger your end-of-day settlement, the more you had to put into your fund. Thatâs how the participants all put in different amounts based on what their activity is.
TL:DR đŚ Summary:
In 2005, FTDs and naked short selling resulted in a (relatively if you read on) small $4bn problem. Now, the problem sits at $183bn, with a jump of over $40bn from just 2019-2020Â alone.
Whilst stocks traded from 1999 to todayâs date have increased by 23%, failures to deliver have grown by 95%.
Dr.T is not surprised owing to the increase in trades, ETFs, and mutual funds, and notwithstanding this, the number of trades and the Clearing Fund didnât rise at the same rate as the FTDs as the potential loss.
Atobittâs theory is they just want to have more cash on account to cover the fails, and Dr. T clarifies that the Clearing Fund just is not enough as it wasnât in the 2008 financial crisis.
Overall, Dr.T and Atobitt agree the players think they have âtoo big to failâ status to obtain a get-out-of-jail-free card.
Dr.T also states the Clearing Fund used to be based on your activity in the market, but the recent changes do not reflect that.
PUTTING THEÂ FAILÂ IN FAILURE TO DELIVER
Dr.T
The fails were not calculated in there until after the financial crises and then finally at that point it was included in there so as the fails rise, now the Clearing Fund should be going up with it and coming down with it.
I think it (edit: the Clearing Fund) is still short, I donât think Iâm, itâs definitely not bigger than the fails
Itâs not as far apart but again you have to look at this across time like what are the changes and then one thing that as I read HOC and Everything Short; youâre looking at those financial statements thatâs where all the good stuff is
Atobitt
Dr.T
Atobitt
Dr.T
Right, exactly and then the other thing is that DTCC and all of its subsidiaries are self-regulatory organizations which means they are regulated by the SEC.
Therefore, all of their rule changes, price increases, everything that they do has to be submitted to the SEC subject to public review, open for comment, I havenât worked DTC since 1993 and the way I keep my knowledge updated is by watching their rule changes and watching, I mean,
I look at their financial statements, they have continued to put less and less of what you really wanted to know and you know that reminds me of that old Paul Simon song, you know Make a New Plan Stan.
As soon as you shine a light on something that you see thatâs not right the cockroaches run from the kitchen, right?
Atobitt
Dr. T
So, you talk about rehypothecation, the problem is really resubmit, reprice, right? And each time a failure occurs, it gets resubmitted for the next dayâs settlement as opposed to being called out.
And if it were called out you could start to really see those numbers come down
TL:DR đŚ Summary: Fails to deliver were not properly calculated until after the 2008 crisis. Dr. T expected the Clearing Fund to rise when failures were introduced, but she still feels it is too short (ironic no?).
The DTCC and its subsidiaries are self-regulated and are therefore only beholden to the SEC and public review (hence rule changes anyone?)
When the rule changes occur, the cockroaches appear.
If fails and naked shorts were called out in the open, Dr. T predicts the numbers of both would drastically decrease.
NEW RULES, AND HOW WE MAKE A DIFFERENCE
Atobitt
I want to jump into recent proposals with DTC, we can spend a couple of minutes talking about this and what the implications are
003 filing - instead of doing this monthly reconciliation weâll do it daily to make sure that youâre not getting too out of hand
Dr. T
Thatâs a minor technical point
because every participant receives
their settlement statement, an early one and then a final one;
a position report and I say report because Iâm old-school and it used to be paper, but now they go online and get one terminally [electronically?]
when they become DTC members they agree that they are responsible every day for letting DTC and NSCC know if something is off
And, if DTC or NSCC think something is off, they have 3 days to fix it.
Once a month or quarter they have to physically sign a paper to say âyes we really looked at itâ
To say it went from monthly to daily is a technical correction because they were always responsible to do it daily
Atobitt
Dr. T
someone on the AMA asked a questionâ if Reddit users are making a difference.
I think this [801] is clear evidence that it is.
When youâre really calling attention to a problem and youâre starting to see rule changes coming out from DTC and subsidiaries, thatâs evidence of an impact.
Because theyâre looking at it and saying:
Their risk can becomeâ can rapidly grow very quickly
One other thing I want to mention is the CSDR (Central Securities Depository Regulations), regulations in Europe
if you look at the website and search âCSD regulationâ, youâll find this information on their website:
This regulation was supposed to go in 2019
then delayed it to 2020
then pandemic hit and itâs 2021, so they pushed it back to 2022
Basically, it says:
YOU MAY NOT FAIL.
If you fail, itâs mandatory that the buyer can go into the market, get the shares, replace what you failed to deliver FTD and charge you the difference.
TL:DR đŚ Summary:
Dr. T thinks that the difference apes are making is clear when you look at the DTCC and its subsidiaries.
We actually have them taking action, to combat the issues we are talking about.
Making rules changes acknowledges the problem, and acknowledgment is the first step to solving it.
HOW THE EURO-APES SAVE THE DAY
Atobitt
Dr. T
Atobitt
Dr. T
There were some circumstances where this rule was mandatory.
But theyâre going to make this mandatory in Europe: yes if the buy-in fails the depository will reverse the trade
Thatâs putting pressure on all the DTCC members in all categories because if they have to comply in Europe, they pretty much have to comply here too.
Atobitt:
Dr. T:
TL:DR đŚ Summary:
Dr.T also speculated that legislation in the EU has the potential to be a driving force for further systemic change.
The reason the EU legislation may be a driving force is that they seek to pass legislation to force buy-ins for failures to deliver.
If it takes effect in Europe, it could ripple across the pond.
FOR NOW, ITâS GOODBYE
Dr. T:
Iâm just so grateful for the encouragement that Iâve received from the r/Superstonk people
I mean, itâs just beenâ itâs what keeps me going
Atobitt:
Dr. T:
Not the outcomes, because the âwhat can we do nextâ is always hard
Because itâs very specific
and itâs not just one thing that can be fixed thatâs going to create the BRAND NEW WORLD
There are lots and lots of things that need to be changed, and each time you call attention to one problem, you know the dark pools arise
so thereâs always this phantom [â]
Atobitt:
Dr. T
âhide it away, right?
So we can talk about doing another AMA
Atobitt:
I was actually going to ask you - itâs a really good transition.
We could go through some solutions, but honestly, if we have some opportunity to do this again.
I wanted to wrap up my end of this by saying:
Iâm sorry you were never able to get to this level.
But now we have a quarter of a million people that are starting to beg and demand answers
And that pitchfork army that you wanted to desperately is here
And my question to you is: would you be open to working, at your own time, and being able to review different posts that might be submitted to you?
We could work on House of Cards 2 and really start to get this stuff ironed out and get the people the tools that they need in order to get this stuff pushed in and get this taken care of
Dr. T:
Atobitt:
Dr. T:
Atobitt:
Dr. T:
I have trouble, Iâm learningâ yes Iâm definitely beginning to read hieroglyphics
And just going on the site and finding things out
Itâs a bit confusing but anywayâ Yes Iâm happy to do that as time allows
and also you know thereâs quite a lot of information in Naked Short and Greedy, thank you for mentioning that
But the other book, Lessons Not Learned
Atobitt:
Dr. T:
So thatâs for the techies right.
If youâre a technical analyst, if you want to look at laws, rules, regulations, the history of how many times have we, you know, bailed out banks and brokers
All thatâs in there (Lessons not Learned)
But Naked Short and Greedy is a narrative, so I wanted to write and establish more storytelling
But if you want that deeper dive, the other book would be helpful to people
Atobitt:
Iâm going to keep you open
Iâm going to be in contact with you to do that
Dr. T:
Atobitt:
Oh by the way, FYI youâve officially been dubbed the âJane Goodallâ of the ape troop now
Thank you very much
Dr. T:
Atobitt:
Get used to itâ youâre gonna have a lot of names like that
So Dr. T, thank you again so much
I mean, wow, we just blew through that
That was a lot of info in an hour
I appreciate your time
Dr. T:
Atobitt:
Well, I appreciate you so much. Thank you very much.
And thank you everyone for tuning in.
Look forward to the follow-up coming outâ shouldnât be too long and weâll be in touch, have a great day
Dr. T:
TL:DR đŚ Summary: We love Dr. T, Queen Kong
credit: u/Crazy-Ad-7869
One final thank you here at the end, this one goes out to all the mods that helped put this together:https://www.reddit.com/r/Superstonk/comments/n1kjaa/official_mod_appreciation_video_for_dr_t_aka/