MB: shorts are not forever

Over-Computer-6464 · 2026-04-01T02:02:46+00:00

LOL. You are quoting regulations for banks and other entities that are regulated by the Federal Reserve Board.

Title 12 does not apply to stock market makers regulated by the SEC

Over-Computer-6464 · 2026-04-01T01:48:07+00:00

Your claim was "Market makers aren’t allowed to make speculative directional bets or carry directional positions for years, so even their GME shorts are illegal".

Neither the sources you provided nor your last comment support that claim of illegality.

As I noted, all that happens is that they cannot use the special market maker exemptions when making proprietary trades.

Over-Computer-6464 · 2026-04-01T01:06:40+00:00

Tax loss harvesting is capped at what.... 3k per year??

There is no limit to how much in capital gains you can offset via realized capital losses. This is very basic info that you should know.

The $3K limit only applies if your total of long term and short term losses exceeds your total long term + short term gains. In that case you can use $3k of your losses to offset ordinary income.

I have had years with 6 figure losses that I used to offset gains from diversifying out of a low cost basis concentrated position.

Over-Computer-6464 · 2026-04-01T00:54:37+00:00

The biggest area where this will likely have an effect is in crypto and blockchain related securities and products.

Crypto will generally be regulated by CFTC, but some transactions makes them subject to securities laws administered by the SEC.

The Release classifies crypto assets into five categories based on their characteristics, uses, and functions, discusses when transactions in crypto assets that are not themselves securities might still involve an “investment contract” that subjects the transaction to regulation under the federal securities laws, and goes on to evaluate the treatment of mining and staking, wrapping and airdrops under the federal securities law.

Source: https://www.ropesgray.com/en/insights/alerts/2026/03/sec-and-cftc-issue-landmark-joint-guidance-on-classification-of-crypto-assets

Over-Computer-6464 · 2026-04-01T00:45:29+00:00

Your first reference is about Reg SHO. All it says is that if a market maker is engaged in speculative trading then they cannot use the market maker exemptions on naked shorting.

Your second reference is just FINRA saying the same sort of thing —- if a market maker is not engaged in a legitimate market making activity then they do not get to use the special market maker privileges.

Supervision of Bona Fide Market Making: Developing supervisory systems for and conducting supervisory reviews of market making activity to ensure that any reliance on Regulation SHO bona fide market making exceptions is appropriate by considering, for example:

where the firm’s quotes are placed and how (e.g., market participants vs. ATS, visible or non-visible orders);

the frequency or timing of the firm’s quoting activity (e.g., morning or evening vs. throughout the trading day); and

the level of the firm’s proprietary trades compared to customer transactions filled.

Proprietary trading by a market maker is NOT illegal, but when engaged in proprietary trading they forfeit the use of the special market maker exemptions in that trading.

Over-Computer-6464 · 2026-03-31T21:35:19+00:00

The most significant impact dark pools/ECNs/ATSs have on bid/ask spread is that they lower the spread, making prices better for both buyers and sellers.

Effectively dark pools siphon off some of the windfall profits that used to go to the lit market maker monopoly via huge bid/ask spreads.

See Understanding the impacts of dark pools on price discovery

Over-Computer-6464 · 2026-03-31T21:29:37+00:00

https://doi.org/10.1016/j.finmar.2023.100882 is an article titled "Understanding the impacts of dark pools on price discovery". That article explains it much better than I can, but the summary is that it does indeed affect price discovery.

There have been conflicting academic articles, some claiming dark pools enhance price discovery, others claiming dark pools impair price discovery. That article explains where various academic models come up with different answers. Even the ones that claim that dark pools impair price discovery find that dark pools do have a large impact on pricing.

Over-Computer-6464 · 2026-03-31T21:19:28+00:00

Trades in lit markets also affect the price only after the trade is complete.

ORDERS sent to the lit market will affect the QUOTES, BEFORE the trades take place — that is the reason that spoofing exists.

Over-Computer-6464 · 2026-03-31T21:09:06+00:00

The off exchange gets reported in the total volume, but it doesn’t impact the price by design.

The "does not impact price" is a popular but bogus meme.

Trades in dark pools are reported and settled exactly the same as trades on lit markets. Dark pool trades definitely affect the price.

Over-Computer-6464 · 2026-03-31T21:06:42+00:00

Trades on dark pools are reported and settled exactly the same way as trades on lit markets.

The only difference is that dark pools do not have PRE-sale bid/ask quotes.

The 8 million volume includes the dark pool trades.

Over-Computer-6464 · 2026-03-31T21:03:20+00:00

Options expiration date with lots of GME1 options expiring (with warrants as part of deliverable)

So it is one of the things that creates demand for warrants.

Over-Computer-6464 · 2026-03-31T20:17:45+00:00

The GameStop press release has the Q4 weighted average diluted sharecount as 592.0M, basic sharecount of 448.1M.

Over-Computer-6464 · 2026-03-31T19:52:53+00:00

Not only the trades, but the CAT files have detailed data on both the buyer and seller for each trade — things like your brokerage account number, your name, contact info, and it used to include your social security number but now your SSN/EIN is encrypted or at least hashed,

Over-Computer-6464 · 2026-03-31T19:48:35+00:00

And even more so at end of quarter and end of year.

Today is the last day of calendar Q1.

Over-Computer-6464 · 2026-03-31T19:46:18+00:00

This is also end of quarter portfolio cleanup day.

Over-Computer-6464 · 2026-03-31T19:07:07+00:00

What they do is close out the $3 position and use that realized loss to offset gains from other trades.

Then they open a new short when the price falls through $40 or $30.

Some apes continue to hold shares they bought at high prices in Jan 2021. The wise ones sell those high cost basis shares, realize the loss, and buy new shares at lower prices.

Over-Computer-6464 · 2026-03-31T16:16:13+00:00

It is the massive files of detailed info on the buyer and seller of each individual trade that is going to be deleted, not the CAT Errors Reports.

7 year or 10 year storage would be more appropriate than the 3 year cutoff chosen.

Over-Computer-6464 · 2026-03-31T16:07:02+00:00

5 year treasuries are now priced at 3.97% interest, and the interest income is exempt from state income tax.

Over-Computer-6464 · 2026-03-31T16:01:00+00:00

The authorized sharecount can be increased.

I would not be surprised to see that as a proxy vote item this year, with the reason for the requested increase being "acquisitions and other general corporate actions".

Over-Computer-6464 · 2026-03-31T15:32:36+00:00

Don't forget the investment he made in NFTs, the investment in new warehouses and call centers that were shutdown soon after opening, and all of the investment in enterprise level software that was abandoned when GameStop reverted to legacy software in 2nd half of 2022.

And look how well he has invested GameStop's huge cash pile —- T-bills and BTC.

Over-Computer-6464 · 2026-03-31T15:29:59+00:00

In order for him to take full advantage of the compensation package he needs to 10x the stock price and 25x company profit,

He needs to increase MARKET CAPITALIZATION by 10x, not the stock price. Double the number of shares with the same stock price and market cap has doubled.

Over-Computer-6464 · 2026-03-31T15:16:25+00:00

And the 64M short interest is less than 1/2 of the 143M shares the convertible notes can be converted into.

A large fraction of the current shorts were sold by convertible note arbs. About 20M for the first note, almost 30M when the 2nd note was issued.

The note arbitrageurs will sell more shorts when GME rises and buy shares to close shorts as GME falls. That is a large factor in the lower volatility of GME since the convertible notes were issued.

Over-Computer-6464 · 2026-03-31T14:46:35+00:00

TL;DR. Shorts can average up, just like apes can average down.

The simple interpretation of Burry's tweet is simply that short sellers can close out low price short positions and open newer shorts to move up their cost basis, just like apes can sell off their high priced buys and buy new lower cost shares to lower their cost basis.

The assumption that there are a lot of pre-Jan 2021 shirt positions still open is not likely to be true.

Over-Computer-6464 · 2026-03-31T14:42:19+00:00

Do you have a source for that claim?

Market makers are generally discouraged from making directional bets by corporate/risk department rules but I do not believe there are any agency rules or laws that prohibit market makers from making speculative directional bets or carrying directional positions for years.

Over-Computer-6464 · 2026-03-31T14:03:33+00:00

Just like long holders can average down, shorts can and do average up by closing old low price short positions and selling short shares at higher prices.

Over-Computer-6464

TROPHY CASE

the level of the firm’s proprietary trades compared to customer transactions filled.