Thread by @CringleKitten

(Part 1) How come have they not covered yet?

Every security trading-related institution (hedge fund or investment bank) is bound by market regulators under a clearing corporation (CC).

$AMC - $GME - $SPCE

(Part 2) Every CC has their specific criteria for their registered members using their services (AUM, custody, validity of transactions) including maintaining a minimum level of liquidity in their brokerage accounts. Consider a CC being a payment processor like Paypal.

(Part 3) This required level of liquidity requirements is somewhat a failsafe to maintain borrowed assets, especially shorts dealing with margin.

(Part 4) If a member of the CC cannot maintain this liquidity, it would need to assemble a collateral within a timeframe before asset liquidation is initiated meaning the defaulted account would be forcibly closed with sold positions.

(Part 5) With bad actors of the market on the verge of falling into their margin balance, they would have to liquidate auxiliary assets they own to maintain that level of liquidity to maintain their shorts - like cryptocurrency and blue chip stocks.

(Part 6) Another way to reduce their risk exposure on a short term is to reload their shorts at higher prices to minimize losses but it isn't sustainable on long term as the borrow fee rate would keep increasing including the rate of short margin requirement.

(Part 7) They will keep kicking the can until their losses exceed their marginal profits - only then they will be forced to cover their short positions.

(Part 8) Another false belief with the community is to believe the DTCC, as of 2019, owns U.S. $63.0 trillion of assets / insurance.

As of 2020, the DTCC owns approximately U.S. $70.0 billion of assets on their financial report (from memory).

(Part 9) The DTCC is a payment processor, just like Paypal, and takes a commission cut from their registered members using their services. However, it also acts as a depository offering asset servicing and custody for their international members valued at U.S. $63.0 trillion.

(Part 10) It means that the DTCC won't liquidate entire accounts from their own members including non-defaulting accounts (U.S. $63.0 trillion) to serve as differential payments for retail investors. Only a fraction from it from defaulting bad actors involved into this mess.

(Part 11) That's why the SEC and clearing corporations are so hellbent to create these new regulations ASAP, creating different lines of defense of accountability so they would be the last ones to pay. They want to make sure the bad actors would be held accountable first.

(Part 12) If hedgies keep reloading their shorts, we could go in the early thousands without any form of covering because it is still profitable for them on the short term until it's not. They know they are screwed anyway.

(Part 13) Once the 005, 801 and 002 kick in, it's going to set off a chain reaction in the financial world that would disrupt entire markets. It is a monumental transfer of wealth.

The ones who would profit the most: retail investors - leading us to a new golden age of finance.