reSee.it - Tweets Saved By @Give_Me_TheJist
@Give_Me_TheJist - Josh Hamilton - Writing A Book About GameStop
#neverforget They needed 270 million shares... This is not how a market should work. #GME https://t.co/bRgpGoHMfO
Video Transcript AI Summary
We were close to a system failure on January 28th due to excessive short positions. If call options were exercised, 270 million shares would need to be delivered, but only 50 million existed. To prevent this, short positions should be published daily and brokers should charge 1% margin for every 1% of short interest to discourage shorting. Increasing margin requirements with short interest is key.
Full Transcript
Speaker 0: Let's just start with a simple question. How close we were to this system breaking, something failing? How close were we, Thomas?
Speaker 1: We were frighteningly close on on January 28th when, we had 50,000,000 registered shares. At the same time, we had 70,000,000 shares short and 150,000,000 150,000,000 shares short via short call options. So if the call options had been exercised, the shorts would have had to deliver 270,000,000 shares while only 50,000,000 shares existed. So as the rules are today, the loan broker has to if he can't get the shares, he has to go into the market and buy the shares at whatever the price is. So that could have pushed the price further up into the 1,000.
When that happens, obviously, the shorts cannot pay up. So the brokers, they default on the brokers. The brokers default on the clearinghouse, and the the whole thing is a is a huge mess that's impossible to untangle. So there is a simple solution for this the way I see. Number 1, we would have to get the the short positions published once a day because we currently have it only twice a month.
And second, we would, the SEC would have to require brokers to charge an additional 1% of margin, for every, 1% of short interest. And that would, then raise the margins progressively so high that people would stop shorting stocks.
Speaker 0: So margin requirements would have to increase as short interest increases. That seems to be the view from you, Thomas.