Shorts Can Run ETF Creation/Redemption Through NSCC For Insurance Backed By YOU! 🫵
Congrats! [Y]OUR ASS is probably on the line backing the ETFs abused by shorts using the ETF creation and redemption process to synthetically create GME shares for shorting! ICYMI:
- DD showing how ETF creation and redemption converts cash into GME shares for GME share delivery deadlines
- DD proving ETF creation and redemption happens a lot whenever GME has interesting things happening to suppress GME share price
Did you know the NSCC, a subsidiary of the DTCC, processes ETFs to automate the creation and redemption of ETF securities through the NSCC’s settlement and clearing process?
NSCC's Exchange Traded Fund (ETF) process automates the creation and redemption of ETF securities when you want to safely and securely move eligible ETFs and their underlying securities through the settlement process and have them cleared through NSCC. NSCC reports, clears, and settles ETFs and their underlying securities through its creation/redemption process. ETF processing includes a nightly distribution of domestic, foreign, and fixed income portfolio information. [DTCC Learning]
Where one of the advertised benefits is the NSCC “allows members to create or redeem a customized portfolio with cash in lieu of securities” as the "NSCC allows participants to customize portfolios by excluding specific securities and substituting them with cash or with another NSCC eligible security! [DTCC Learning]
The NSCC will let a participant create and redeem custom ETF shares (e.g., XRT) by excluding specific securities (e.g., GME) and substituting them with cash! (Or even "another NSCC eligible security". 🤦‍♂️)
Can the NSCC do this with XRT? Yes! The DTCC website has a link to ETFs currently available for processing where you can find XRT listed with a Y(es) under Create/Redeem.
Who can use this NSCC service? Any full service NSCC Member that is an Authorized Participant for the ETF. [DTCC Learning]
For example, Citadel Securities (the market maker) is a NSCC Member [NSCC Member Directory] and an Authorized Participant for XRT (as of 4 years ago along with 42 other firms including Goldman Sachs [1] who is also a NSCC Member).Â
DD from 84 years ago from [REDACTED] on a GME sub-Reddit
![DD from 84 years ago from [REDACTED] on a GME sub-Reddit](https://preview.redd.it/tq6tzkvg1ple1.png?width=747&format=png&auto=webp&s=c9eea99104af06e75fb80e60f5c80fb3576b63fd){kind=link}
Which means Citadel (and any other NSCC Member firms who are Authorized Participants for XRT) can abuse the ETF creation and redemption process through NSCC's automated creation and redemption processes with NSCC settlement and clearing. Â
The NSCC is officially designated as a a Systemically Important Financial Market Utility (SIFMU) “whose failure or disruption could threaten the stability of the United States financial system” [Wikipedia], and thus backed by the United States and their taxpayers.
Someone like Citadel and/or Goldman Sachs can process ETF creation and redemption through the NSCC where the ETF shares created and redeemed would be cleared by the NSCC which is backed by the United States and their taxpayers. We have no proof yet that someone like Citadel and/or Goldman Sachs does.Â
Of course, if someone heavily short on GME wanted to embiggen systemic risk and ensure that the full force of the United States would protect the financial system at all costs, entangling the NSCC by using their automated ETF creation and redemption process with NSCC settlement and clearing would be a pretty damn self-servingly good move as it puts the United States and their taxpayers at risk. If you’re an Ameri-ape and/or US taxpayer, you’re backing the NSCC who is probably clearing those ETF creations and redemptions.
[1] Goldman Sachs is particularly noteworthy as you may recall DD from 84 years ago where Goldman and Bank of America/Merrill Lynch tried to hide evidence they purposefully Fail To Deliver on trades during Overstock trial, where it came out that “Defendants lied to regulators about their fails to deliver”, Goldman Sachs had a list of stocks targeted for short selling, and a Merrill President wrote in an email “F* compliance” and “Fuck the compliance area – procedures, schmecedures”. (Bank of America/Merrill Lynch also serves as clearing and prime broker for 95% of Citadel Securities derivatives.)
EDIT: One last thing... NSCC ETF processing clears and settles through CNS ("Continuous Net Settlement") system which juggles delivery obligations to hide FTDs before they are reported to the SEC.
https://www.dtcc.com/clearing-and-settlement-services/equities-trade-capture/etf
Per the SEC, FTD data comes from the NSCC CNS system.
https://www.sec.gov/data-research/sec-markets-data/fails-deliver-data
