NSCC approved Enhancements to the Gap Risk Measure & the VaR Charge on 8/8/23

Implementation Was 60 business days from 8/8/23 which would be either 10/24 or 10/25 depending if Labor Days was counted then today, the 25th, BoA stops stock loaning? Hmmm....

The rule and implications:

The approved rule aims to address the potential increased idiosyncratic risks NSCC might face, especially regarding the liquidation of a risky portfolio during a member default.

Enhances NSCC's ability to recognize and produce margins that match the idiosyncratic risks and attributes of portfolios that meet the concentration threshold.

Broadening the gap risk charge to an additive feature and focusing on the two largest non-diversified positions will help NSCC better manage the idiosyncratic risks tied to concentrated portfolios.

Given the additive nature of the gap risk charge, the Commission agrees that the adjustments to its calculation, like establishing floors for gap risk haircuts for the two largest positions, are aptly designed to handle NSCC’s idiosyncratic risks exposure during member defaults.

Introducing specific criteria to determine which securities fall under the gap risk charge will enable NSCC to pinpoint those more prone to idiosyncratic risks, ensuring ETFs identified as non-diversified are included.

VaR tinkers with the mechanics that would have defaulted Robinhood & Others 1/28/21.

The NSCC, previously saved them by sacrificing retail, in allowing Robinhood and others to alter their margin charges and freezing the buy button.

Robinhood & Other Brokers Would Have Defaulted January 28, 2021 - The NSCC, as an enabler, saved them, while sacrificing retail, in allowing them to alter their margin charges by freezing stock buying - top priority: protecting too-big-to-fail clearinghouse - Retail's fault the NSCC didn't prepare

Implementation is 60 business days from 8/8/23

The changes should lead to higher margin requirements for those with short positions in volatile stocks like GameStop. The higher the costs, the more pressure on short sellers to close their positions, especially if they face liquidity challenges.

If short sellers can't meet their margin requirements, they'll be forced to buy back the shares to close their positions, leading to a surge in demand and subsequently, a rise in share price.

As the stock price rises due to forced buybacks, other short sellers face further margin calls, creating a snowball effect where more short sellers are forced to buy back shares, pushing the price up even further until lift off...

Details from day of - https://www.reddit.com/r/Superstonk/comments/15m2732/moass_prediction_october_24_2023_a_tuesday/

X Sauce - https://twitter.com/741trey/status/1716927731991257596