Welcome back to the channel everyone today, i want to talk about how the shorts will be forced to report their positions and soon be forced to cover so stay tuned, and let's make some money, and now i want to dive straight in with the information, so the Sec has recently proposed a new short sale disclosure rule, an order marking requirement and some new cat reporting amendments. The sec today announced that it's voted to propose changes that would provide greater transparency to investors and regulators by increasing the public availability of short sale related data. A new exchange act, rule 13, f-2 and corresponding form sho would require certain institutional investment managers to report short sale, related information to the commission on a monthly basis. The commission, then, would make aggregated data about large short positions, including daily short sale activity, data available to the public for each individual security and gary gensler says this would provide the public and market participants with more visibility into the behavior of large short sellers.

The raw data reported to the commission on a new form show would help us better oversee the markets and understand the role short selling may play in market events. He said it's important for the public and the commission to know more about this important market, especially in times of stress or volatility, just like when meme stocks start their run. The commission also voted to propose a new provision of regulation show rule 205, which would establish a new buy-to-cover order, marking requirement for broker-dealers regulation. Sho requires broker dealers to identify each sale order that it affects as either long short or short exempt, but it does not currently have a corresponding requirement for purchase.

Orders currently broker dealers report if they're selling a security or shorting a security, but what they don't report on or what they don't differ between is, if they're, going long on a security or, if they're buying, to cover a previous short position. Therefore, you can tell the difference between shares being sold and shares being shorted, obviously, because the shares being shorted have to be borrowed first, but you can't tell the difference if a short position is actually being closed out or if a different fund is just buying. Shares proposed rule 205 would require a broker-dealer to mark a purchase order as a buy to cover if the purchaser has any short position in the same security. At the time the purchase order is entered.

This information will be especially useful to the commission in reconstructing significant market events and identifying potentially abusive trading practices, including short squeezes. Basically, this will help the sec reconstruct a market crash when it happens to identify if shorts have properly covered their short positions or, if they've, just bought additional securities to try and profit from the rebound and the crash and, more importantly, it will help the sec identify. These shorts, that are massively massively over leveraged on amc and gamestop, have actually properly covered their shorts or, if they're, just trying to buy, shares and profit from the squeeze and not lose so heavily when their short positions end up being liquidated. Instead of citadel trying to buy tons and tons of shares during the amc squeeze and trying to say guys, look at all the profit we made we've been holding tons and tons of amc shares the entire time.

We don't need to be liquidated because we're holding all of these amc shares and their entirely profitable longs the sec can step in and say, hang on. Actually, you bought those shares to cover your shorts. Therefore, you still haven't bought enough shares, therefore, you're being liquidated, because you haven't properly covered your shorts you're, just trying to miss mark short coverings as going long and the sec is also adjusting the consolidated audit trail or the cat to include this by to cover order. Type now you may say: okay tom, that sounds brilliant, but why is it beneficial to us what kind of firms have to report their short positions? Is it all of the short hedge funds, or only the really really large ones, and when does this rule come into play? Is this the new rule that comes into play on the 3rd of march, or is this not coming into play just yet now? This is good because the raw data reported to the sec on a new form show would help the sec to better oversee the market and understand the role short selling may play in market events.

Like a market crash, the proposal would apply to certain institutional investment managers who hold in an equity security of a reported issuer, a short position of at least 10 million dollars or the equivalent of 2.5 or more of the total shares outstanding. So that means that actually, basically, all short hedge funds are going to have to report their short positions as 10 million dollars isn't actually that significant of a position, it's not just multi-billion or multi-trillion dollar hedge funds, shorting securities, it's hedge funds that are shorting only 10 Million dollars worth of shares, 10 million dollars worth of amc is somewhere between 500 000 to a million shares, and therefore, all of these short hedge funds and market makers that are holding these billions of synthetic shares will all be forced to report their short positions. The sec has said given past market events, it's important for the public and the commission to know more about this important market, especially in times of stress or volatility. The proposed rule would help the commission address future market events like future amc, run-ups and future amc squeezes striking a balance between the need for transparency and the price discovery process.

So this is a new proposed rule. 13 f-2 obviously proposed means that it's not yet enacted a proposed rule first has to go through a comment period. Then it's voted on and then it's passed into law. If we look at rule 10c-1, this is the rule for securities lending.

This was first proposed by the sec on november 18, 2021 and the initial comment period for rule 10c, 1 ended on january 7th 2022. Therefore, we're likely to see a two or three month, long comment period before the sec end up voting on this rule, and they could then reopen the comment period for further comments and deliberation before it's passed and phased into law. Although it does look like the sec is trying to speed this one up, because if we go to this proposed rule, it says that comments are due 30 days after publication in the federal register or on april 10th. Whichever is later so, that's just under a month and a half, so i assume this rule is likely to be voted on on april the 10th and could end up being phased into law fairly immediately after that vote guys.

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Now i think this rule is brilliant, because it's going to force hedge funds and institutions and market makers to reveal their full short positions. Now, interestingly, i think the most important part of the rule is this sentence here. It says the proposed amendments also include a provision that would require each cat reporting firm to indicate where it is asserting use of the bona fide market. Making exemption under regulation show.

That means that market makers have to report all of the shortage shares, including the synthetic shares they've had to create under the bonafide market. Making exemption under regulation show. Obviously, we know that market makers can create synthetic shares, if required in order to make a market and prevent liquidity from drying up. Obviously, what market makers can't do is hold illegal synthetic shares and naked shorts for months and months and years and years.

Therefore, this ruling does mean that the market makers are going to have to report all of their shortage shares, including the synthetic shares and just mark the synthetics, with the market-making exemption. Now, the only thing that makes me a little bit nervous is if the market makers can somehow find a way to wiggle themselves out of this one, just like they've been doing over the last year. Maybe those market makers just choose to not report all of the synthetic shares and hope that the sec doesn't find out. Maybe they mismark them as long positions instead of shorted shares or instead of synthetic shorts, or maybe somehow they end up convincing the sec.

They had to create all of these synthetic shorts under the bonafide market, making exemption to ensure that all these hedge funds didn't get liquidated and crash the wider market. Maybe these market makers have already convinced the sec they had to create these synthetic shares to prevent the market from crashing. But that's why the sec is working on developing these securities financing transaction regulations to ensure that these hedge funds can be liquidated without crashing the market. I think maybe this ruling will expose the market makers for creating all of those synthetic shorts and that's why the sec has been putting this sft ruling into place to ensure that when amc does squeeze these short hedge funds, don't necessarily get liquidated and sell all of Their stocks crashing the market, they just exchange those stocks for cash in order to be liquidated and buy back their amc shares to cover their shorts.

The problem being is that if these short, hedge funds have to sell off all of their long positions in apple, microsoft, tesla and many others, they could end up crashing the market even worse than it's already crashing at the moment. But with the sft rulings, they can exchange these long positions for cash and be liquidated in an orderly process and use that cash to buy back their shorts and cover their short positions without crashing the wider market. All i know is that i'm very excited to see exactly what happens when this ruling is passed and phased into law. Whether the market makers will somehow find a way to hide their synthetic shorts and kick the can again or whether they'll be exposed once and for all.

I've also got some very interesting tweets on potentially upcoming margin calls new york angelo recently tweeted saying ubs is telling some clients to add cash or securities to their portfolios. Those who don't meet the requirements may see their securities get liquidated at market value and, interestingly, credit suite is also joining ubs bank in cutting lending against russian debt margin calls are about to hit wall street hard once the big banks change their margin, maintenance requirements. Basically, credit suisse and ubs have both cut the value of russian debt held by these hedge funds to absolute zero, as a result of what's going on between russia and ukraine, and this means that there could be a number of large hedge funds that are holding russian Debt that all of a sudden have this debt made worthless and end up being margin called. Obviously, if they can't meet their margin, maintenance requirements and end up getting that margin call, they may end up having their entire position liquidated and not just their entire position in russian debt, but their entire portfolio may be liquidated at market value.

Guys be sure to. Let me know down in the comments below what you think about the shorts being forced to reveal their positions and, as always guys, if you enjoyed this video, be sure to check out some of my others, alternatively, subscribe to channel and do that notification bell. Because that way, you'll be alerted when i upload a new video cheers.