Welcome back to the channel everyone, the dtcc know that amc is gon na squeeze and they also know that that squeeze is gon na cause a wider market crash. So today i'm gon na go through the new dtcc rule. That proves that and also tries to resolve the crashing portion of it. Trust me guys you do not want to miss this video, so stay tuned and let's make some money, but first i've got two very important announcements to make.

The first is that i've recently seen a lot of amc youtubers have had their channels terminated, so guys, please be sure, to go down into the description below and give me a follow over on twitter. So i've got an alternative way to make my voice heard. The second is that i also want to give a massive shout out the 2000 of you that have currently dinged that notification bell, because you guys are always the first to watch a new video as soon as it's released so guys be sure to drop a like Down below subscribe to the channel and ding that notification bell, if you haven't already so that you don't miss another video, just like this one and now i want to dive straight in with the key information, so nscc202101o, hello, fellow apes. I found this thread concerning the new nscc 2021 010 filing, and i wanted to share it with you, as it seems to make simple clarification for the new dtc filing.

This will be a big threat and more will be added. The initial brief is this, though: the nscc wants to protect the market from a crash in the event of a fire sale resulting from the hedge funds being forced to buy back their shorts. Many know that moas is imminent. The nfcc is looking to add new membership groups and allow what is called sfts security financing transactions.

These would essentially allow more liquidity loans collateralized against securities, for groups that are in bad shape, as in forced to buy back their shorts. We know that when hedge funds are owing so many shares back to us that typically in a mother of all short sweets is marginal, they would have to liquidate their long positions potentially causing a market-wide fire sale. Selling of mass shares could crash some stocks to prevent this. An in-trouble hedge fund could lend long or short-term their long positions to the sft members in exchange for cash, only cash allowing them to access capital to buy back the shares, in example, for the amt shores.

Without all of the long positions being sold for a loss which, if sold for a loss, would cause much of the market to lose liquidity and cause a potential crash crash is relative. I don't necessarily mean a 2008 level crash, for example, one which is where we are now three sfts, the amc. Mother of all short squeezes happens. Hedge funds needed to cover hedge funds sell billions worth of long positions in tesla, microsoft, amazon, therefore tesla, microsoft and amazon.

All begin to crash, as does the s p, 500 and many other indexes. The market then gets scared and everyone else begins to sell. Therefore, the apes win for the amc moas, but everyone else loses. Everyone else loses their job and we end up in a recession.

Again potentially example, two with sfts amc, mother of all short squeezes happens, the hedge fund's good, the sfts and park their long shares in a trade for cash. They effectively owe interest on top of that loan. Obviously, market shares are not sold and the market stays stable. Apes win market wins bad hedge funds lose billions, but don't grow bankrupt.

To me this is a win-win because we win and the market stays afloat. Now this post on reddit was very difficult to read because it was very poorly punctuated, so let's go and have a look at the actual filing on the dtcc website. So the nscc is proposing to introduce central clearing for xfts, which are broadly speaking, securities lending transactions. Where parties exchange equity securities against cash, the events simultaneously agree to exchange the same securities and cash plus or minus a rate payment on a future date so effectively.

The hedge fund, that's in trouble, says i'll, lend you a billion dollars worth of tesla for a billion dollars in cash and then in two years time, i'll give you the billion dollars worth of cash back plus an extra. I don't know 100 million dollars on top for my tesla shares. In particular, the proposed sft clearance service would expand central clearing at nfcc to include sfts with a one business day term sfts involved the owner of securities, transferring those securities temporarily to a broker. Typically, a hedge fund sfts are often facilitated and intermediated by broker-dealer and agent lender.

In return for the lend securities, the borrower, transfers, collateral and a net rate payment is typically transferred to either the lender or the borrower. That reflects the liquidity of the lend securities, as well as any interest on any cash collateral, so maybe there's an upfront payment for the transaction initially and then also they pay interest over the longer term. The nfcc understands that sfts provide liquidity to markets and facilitates the ability of market participants to make delivery on short sales and thereby avoid failures to deliver naked shorts and similar situations. So basically, the nscc realizes that it's quite key to have sfts or an sft role to ensure that failure to delivers and naked shorts don't become apparent, because people can't locate the shares or don't have enough cash at that moment to enter into the transaction.

It then also expands on that and says a liquidity risk may also arise if, in the context of a stressed market scenario, borrowers or lenders concerned about their counterparty's credit worthiness seek to unwind their securities lending transactions and obtain the return on their cash collateral securities. This occurred to a certain extent in 2008, when borrowers began demanding to return borrowed securities in exchange for the cash collateral. The borrowers had posted to institutional firm lenders. These runs may require institutional firm lenders to quickly sell off securities that are the subject of their cash reinvestments to raise cash to return to the borrowers, thereby also creating potential fire sale conditions with respect to the reinvestment securities, as described above.

Similarly, borrowers may need to purchase or reborrow securities in stressed market conditions, leading to potentially significant losses. What this paragraph is saying is that obviously, hedge funds and institutions have to meet cash collateral requirements. They also have to have certain margin requirements, and if they fall slightly under those requirements, they would have to sell up securities potentially lots of securities to meet those requirements. Selling massive amount of securities to meet cash collateral requirements could again cause a fire, sale and a market crash.

Therefore, the nscc wants to implement something where, instead of selling off their billion dollars worth of apple, all in one transaction, they can just lend it to another participant who can give them the cash in return. Therefore, these hedge funds can effectively borrow the cash from other brokers and other market makers and other institutions to buy back all of their amc shares for their giant amc short position when they get liquidated without crashing. The entire market peter and the portfolio manager also had this to say, as the amc and gamestop saga has evolved, i've posted about efforts by the dtcc to update rural policies. I've specifically mentioned them as being a bullish indicator, because the intent seemed to be to ring fence an incautious actor from the rest of dtcc participants in advent of leveraged induced meltdown.

Indeed, there were specific rules passed for day-to-day reporting of positions and potential force liquidations. Basically, the dtcc wants the ring fence these risky participants to make sure they don't blow up the entire market, so the rules passed and nothing happened. No squeeze no margin, calls more ridiculous price movements that can't be attributed to an 80-plus percent retail base. That, mostly just buys, holds and buys more.

My sense - and this is just speculation - is that once the dtcc started getting more accurate reporting data on the scale of system-wide shorts, they realized marginals would destabilize the entire financial market. You can't say they aren't still working on solutions and yesterday's drop of nscc 2021 010 proves that it's a monster document - and i doubt i'll ever have time to fully read it. But the intent appears to be to create a liquidity facility similar to the repo market. But for equities and seriously, you can't help but be encouraged by the straight talk on page 4 of the document.

The nscc understands that sfts provide liquidity to markets and facilitates the ability of market participants to make delivery on short sales and thereby avoid failure, delivers naked shorts and similar situations. So the nfcc is using the term naked shorts, which are synthetics, and the principle of almost everyone, buying, amc and gamestop is that synthetic shorts exist on mass quantities and the nscc is proposing this rule change on the basis that naked shorts need to be covered. They're also proposing this rule change and agreeing that naked shorts do exist and failure delivers do exist in the market and they're becoming a problem and need to be ring fenced the next time some troll claims there's no naked shorts and i'm delusional, and i need mental Help i'll refer them to the nfcc, as they also agree. I personally think this filing is great news.

Maybe the dtcc are actually aware of the problem and they are trying to do something about it. They are trying to actually make these hedge funds cover their shorts, but they're also trying to be careful not to implode the entire market. Maybe peter han is right. Maybe the dtcc passed all these rules and they were just about to lay the hammer down and make these shorts cover all their positions.

And then they ran the numbers and they were like hang on. If we make citadel cover their entire amc short position and all the other hedge funds cover their amc short positions, they're gon na need to sell billions and billions and billions of dollars worth of big blue chip stocks to meet that cash requirement and potentially crash the Entire market, the dtcc had been taken a step back and said, hang on a second before we make these hedge funds liquidate their entire portfolio and blow up the entire market. Can we reinfest them, so they just blow up themselves and don't really do any damage elsewhere. Therefore, these hedge funds will be made to lend out all of their long positions in return for cash use the cash to cover their amc short positions without having to sell their long positions and crashing the entire market.

Therefore, even though we're all having a go at the sec and the dtcc, maybe they are still in the game they're just trying to you know minimize collateral damage a little bit guys. Let me know down in the comments below what you think about this new rule. Dtcc 2021.010. Do you think it's a good idea to ring fence those hedge funds that are going to implode so that it doesn't impact the wider market? Also guys, if you want to pick up some shares in amc, but you haven't even yet signed up for a trading platform, please be sure to sign up with fidelity because they don't sell their order flow to the dark pools.

However, if you want to buy some shares in any other stock, like apple tesla, amazon or anyone else be sure to sign up to weeble, if you're in the us, using the link down in the description below to get some free shares. If you're in the uk there's free trade - and you can use the link again down in the description below to get some free shares and as always guys if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted when i upload a new video cheers.