Usually when a transaction happens there's an allowance of 3 days for the seller to deliver the stock and the buyer to deliver the money.
What that statement is saying is that for 5 days consecutively, some seller of NQ's stock could not deliver the stocks they committed to sell to the buyer and on each of these days 1. the volume was over 10,000 shares each AND 2. 0.5% of the issuer's total shares outstanding.
Edit: so .5% of total shares outstanding (51M) is 255,000 Shares. Thats 5 days over 255,000 shares failed to deliver
theres generally strict penalties
after a certain amount of time the NSCC can do a "buy-in". This means that they purchase the shares in the market, and charge you in cash for the cost of the buy-in + a penalty charge.
Also if a broker has a pattern of failing to deliver it will attract the attention of the SEC, who will suspect (correctly) that they are engaging in illegal naked shorting. You could get kicked out of the securities markets eventually.
Here is the official SEC definition from 2008
Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-Borrow
The Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so.
If a short sale violates this close-out requirement, then any broker-dealer acting on the short seller's behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer's activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer.
Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period.
What this potentially means is at least 1 shortseller or broker who is 'forced' to buy at market value and deliver the stocks it promised. Also, they are no longer able to short sell for a time
What that statement is saying is that for 5 days consecutively, some seller of NQ's stock could not deliver the stocks they committed to sell to the buyer and on each of these days 1. the volume was over 10,000 shares each AND 2. 0.5% of the issuer's total shares outstanding.
Edit: so .5% of total shares outstanding (51M) is 255,000 Shares. Thats 5 days over 255,000 shares failed to deliver
theres generally strict penalties
after a certain amount of time the NSCC can do a "buy-in". This means that they purchase the shares in the market, and charge you in cash for the cost of the buy-in + a penalty charge.
Also if a broker has a pattern of failing to deliver it will attract the attention of the SEC, who will suspect (correctly) that they are engaging in illegal naked shorting. You could get kicked out of the securities markets eventually.
Here is the official SEC definition from 2008
Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-Borrow
The Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so.
If a short sale violates this close-out requirement, then any broker-dealer acting on the short seller's behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer's activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer.
Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period.
What this potentially means is at least 1 shortseller or broker who is 'forced' to buy at market value and deliver the stocks it promised. Also, they are no longer able to short sell for a time