🚨📺 STONKY NEWS ~SPECIAL REPORT 📺🚨 Dr. Susanne Trimbath AMA Transcription and summary, with supporting materials (and memes) PART:2
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|  [u/Bye_Triangle](https://www.reddit.com/user/Bye_Triangle/)  | [Reddit](https://www.reddit.com/r/Superstonk/comments/n1vubv/stonky_news_special_report_dr_susanne_trimbath/) | [Susanne Trimbath PhD](https://twitter.com/SusanneTrimbath?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) |

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[Education 👨‍🏫 | Data 🔢](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Education%20%F0%9F%91%A8%E2%80%8D%F0%9F%8F%AB%20%7C%20Data%20%F0%9F%94%A2%22&restrict_sr=1)

THIS IS THE SECOND PART, SEE PART ONE HERE: <https://www.reddit.com/r/Superstonk/comments/n1vubv/stonky_news_special_report_dr_susanne_trimbath/>

[![r/Superstonk - 🚨📺 STONKY NEWS ~SPECIAL REPORT 📺🚨 Dr. Susanne Trimbath AMA Transcription and summary, with supporting materials (and memes) PART:2](https://preview.redd.it/2778p79gwbw61.jpg?width=1432&format=pjpg&auto=webp&s=dbad9f8f2cc6a3d586134f52aa33197ce7b084e1)](https://preview.redd.it/2778p79gwbw61.jpg?width=1432&format=pjpg&auto=webp&s=dbad9f8f2cc6a3d586134f52aa33197ce7b084e1)

Dr. Susanne Trimbath AMA Transcription. Summaries, supporting materials, punctuation and memes brought to you by u/Bye_Triangle, u/Luridess, u/Leaglese & u/Cuttingwater_

THE EVIDENCE

-   Atobitt

    -   So, right there at the top more than ⅓ of companies receive more votes than shares that are outstanding.

    -   That is direct evidence of what we are talking about here. Now I want to really drill into the FTDs.

    -   The 'open positions due' to the NSCC, and these are quotes from your book, 3.4 billion open positions due to the NSCC, open position to *buy* participants with the NSCC was 2.45 billion, that results in open total fails 5.8 billion in 2005 or?

-   Dr. T

    -   2000? or something like that

-   Atobitt

    -   2005 or 2007 or something? Something like that and from that, I pulled the same report 2019-2020, 2020's total and they've thrown this euphemism on there now it is no longer fails it is 'open positions for which a trade guarantee is applied'

-   Dr. T

    -   Right, there is only that when there is a fail, as otherwise, it's just due next week or...

-   Atobitt

    -   Would you be surprised to know that your $5bn figure in 2005, basically pre-financial crises figure of 08, has turned into a $183bn figure?

-   Dr. T

    -   Not really, but keep in mind part of that is there are more issues being traded in, there are... there are more types of issues since 2005-2006 NSCC has added ETFs, mutual funds, they've got some bonds through there so there is more activity, more numbers to settle that's certainly true so that's why when you use those figures in HOC or everything short, to put a denominator on there

-   Atobitt

    -   There's that distinction, yes

-   Dr. T

    -   It's a multiple something, a fraction of something, so when I look at the $183bn open positions, I want to go look at the Clearing Fund, because if that $183bn doesn't show up, it's the Clearing Fund that NSCC would draw on to cover that.

    -   So that's, for me, that's the denominator. Like I said a multiple or fraction, in the 03, 04, 05 if there were 40x if the FTDs were 40x the Clearing Fund if those fails really fail there is no way ...

-   Atobitt

    -   It'd be game over, *game over*.

TL:DR 🦍 Summary:

-   The direct evidence of naked shorting exists and remains today in that over ⅓ of companies receive more votes than are actually outstanding.

-   FTDs have been classified in a new way, 'open positions for which a trade guarantee is applied' and on Atobitt pulling the same report Dr. T did at the time of her book, the problem has risen from a $4bn problem *to a $183bn* *issue*.

-   Dr. T explains she is not surprised the problem has grown to this extent, owing to the advent of ETFs, Mutual Funds, and increased trading, etc...

-   Dr. T warns all apes that you need context, like a denominator (her example, the Clearing Fund) in order to contextualize and understand your DD and appreciate the bigger picture.

GET OUT OF JAIL FREE

-   Atobitt

    -   We're gonna talk a little bit more about these DTC proposals that have come out, I really wanna pick your brain on those.

    -   Yeah, that jump from to $184 billion was up $40bn alone from 2019, to your point about the Clearing Fund. Another point you illustrated in your book, was keeping the ratio or the volume of stock that's being traded on the NYSE, and as a comparison showing, we have a volume increase for a period between '99 to '03 and '03 to '06, 3 years to 3 years, the volume of total trades increased by about 29%, *for the same time frame, a 95% in FTD*

-   Dr. T

    -   So, I never met a number I didn't like. Let me get a bit more math-y with you, so when reporters would go to DTC and say hey, why is the volume the value of fails gone from $5bn to $183bn?

    -   "We do more trades." "Trade values are rising." Bought as a percentage of transactions, processes still are a fraction of 1% but what I'm looking at is what is that change across time?

    -   So, if trade volume is the deal so fails are going up, then the change in trade volume should parallel this somehow, but it's just not there

-   Atobitt

    -   It's just not there. To the point that you just brought up about that clearing fund, to the people that have been following my posts and your book talked about FTDs jumping like 1000% or 100% I also noticed these liabilities and assets going up, Citadel was somebody hard not to ignore in Citadel Has No Clothes, I don't think you actually reviewed that, but the point I'm trying to make is that asset side, or liabilities side has jumped 100% the assets are held by the DTC who are supposed to cover those.

    -   Also looking at the Clearing Fund balance of the NSCC, we have another 100% jump so in 2019 we had a Clearing Fund balance of $4bn but the 2015 Clearing Fund balance is just under $13bn and there was a 119% jump from 2019-2020 alone.

    -   So we talked about the amount being held to cover these shorts, and they say well we will have fewer failures if we just have a bigger deposit account.

-   Dr. T

    -   Well, there's a relationship between the two now right so in, so in the comment leading up to the 2008 financial crisis, um I um, made the points in several places that what we just talked about, the Clearing Fund was a fraction of the fails right, that the risk in the system was enormous, to know that was, you know, because that's, you know they are too big to fail, status, right?

    -   Okay so after that

-   Atobitt

    -   The get-out-of-jail free card right?

-   Dr. T

    -   Right, so probably in, I've forgotten the year as I said, so probably 09 2010, something like that, prior to that there was no calculation for the Clearing Fund that included fails.

    -   So it was a big foreign activity, the more trades you did, the bigger your end-of-day settlement, the more you had to put into your fund. That's how the participants all put in different amounts based on what their activity is.

TL:DR 🦍 Summary:

-   In 2005, FTDs and naked short selling resulted in a (*relatively if you read on*) small $4bn problem. Now, the problem sits at $183bn, with a jump of over $40bn from just 2019-2020 *alone*.

-   Whilst stocks traded from 1999 to today's date have increased by 23%, *failures to deliver have grown by 95%*.

-   Dr.T is not surprised owing to the increase in trades, ETFs, and mutual funds, and notwithstanding this, the number of trades and the Clearing Fund didn't rise at the same rate as the FTDs as the potential loss.

-   Atobitt's theory is they just want to have more cash on account to cover the fails, and Dr. T clarifies that the Clearing Fund just is not enough as it wasn't in the 2008 financial crisis.

-   Overall, Dr.T and Atobitt agree the players think they have 'too big to fail' status to obtain a get-out-of-jail-free card.

-   Dr.T also states the Clearing Fund used to be based on your activity in the market, but the recent changes do not reflect that.

_____________________________________________________

PUTTING THE *FAIL* IN FAILURE TO DELIVER

-   Dr.T

    -   The fails were not calculated in there until *after* the financial crises and then finally at that point it was included in there so as the fails rise, now the Clearing Fund should be going up with it and coming down with it.

    -   I think it (*edit: the Clearing Fund*) is still short, I don't think I'm, it's definitely not bigger than the fails

    -   It's not as far apart but again you have to look at this across time like what are the changes and then one thing that as I read HOC and Everything Short; you're looking at those financial statements that's where all the good stuff is

-   Atobitt

    -   Yeah

-   Dr.T

    -   That's what if you want information about those NSCC fails, that's where it is

-   Atobitt

    -   One sentence can change your entire interpretation of what you just read on the previous page.

-   Dr.T

    -   Right, exactly and then the other thing is that DTCC and all of its subsidiaries are self-regulatory organizations which means they are regulated by the SEC.

    -   Therefore, all of their rule changes, price increases, everything that they do has to be submitted to the SEC subject to public review, open for comment, I haven't worked DTC since 1993 and the way I keep my knowledge updated is by watching their rule changes and watching, I mean,

    -   I look at their financial statements, they have continued to put less and less of what you really wanted to know and you know that reminds me of that old Paul Simon song, you know Make a New Plan Stan.

    -   As soon as you shine a light on something that you see that's not right the cockroaches run from the kitchen, right?

-   Atobitt

    -   Right.... Right

-   Dr. T

    -   So, you talk about rehypothecation, the problem is really resubmit, reprice, right? And each time a failure occurs, it gets resubmitted for the next day's settlement as opposed to being *called out.*

    -   And if it were called out you could start to really see those numbers come down

TL:DR 🦍 Summary: Fails to deliver were not properly calculated until *after* the 2008 crisis. Dr. T expected the Clearing Fund to rise when failures were introduced, but she still feels it is *too short* (ironic no?).

-   The DTCC and its subsidiaries are *self-regulated* and are therefore only beholden to the SEC and public review (hence rule changes anyone?)

-   When the rule changes occur, the cockroaches appear.

-   If fails and naked shorts were called out in the open, Dr. T predicts the numbers of both would drastically decrease.

_____________________________________________________

NEW RULES, AND HOW WE MAKE A DIFFERENCE

-   Atobitt

    -   I want to jump into recent proposals with DTC, we can spend a couple of minutes talking about this and what the implications are

    -   003 filing - instead of doing this monthly reconciliation we'll do it daily to make sure that you're not getting too out of hand

-   Dr. T

    -   That's a minor technical point

    -   because every participant receives

        -   their settlement statement, an early one and then a final one;

        -   a position report and I say report because I'm old-school and it used to be paper, but now they go online and get one terminally [electronically?]

    -   when they become DTC members they agree that they are responsible every day for letting DTC and NSCC know if something is off

    -   And, if DTC or NSCC think something is off, they have 3 days to fix it.

    -   Once a month or quarter they have to physically sign a paper to say "yes we really looked at it"

    -   To say it went from monthly to daily is a technical correction because they were always responsible to do it daily

-   Atobitt

    -   801 ruling? The one that says if we find out your funds are not as up to date as it needs to be we can require you to update that deposit within one hour.

-   Dr. T

    -   someone on the AMA asked a question-- if Reddit users are making a difference.

    -   I think this [801] is clear evidence that it is.

    -   When you're really calling attention to a problem and you're starting to see rule changes coming out from DTC and subsidiaries, that's evidence of an impact.

    -   Because they're looking at it and saying:

        -   "You know what? Maybe we need to check this fails balance more often because once a month wasn't enough, maybe we should do this every day because look at Gamestop-- not only the dollar value but also the number of shares exploded."

    -   Their risk can become-- can rapidly grow very quickly

    -   One other thing I want to mention is the [CSDR (Central Securities Depository Regulations), regulations in Europe](https://www.esma.europa.eu/regulation/post-trading/settlement)

    -   if you look at the website and search "CSD regulation", you'll find this information on their website:

        -   This regulation was supposed to go in 2019

        -   then delayed it to 2020

        -   then pandemic hit and it's 2021, so they pushed it back to 2022

    -   Basically, it says:

        -   YOU MAY NOT FAIL.

        -   If you fail, it's mandatory that the buyer can go into the market, get the shares, replace what you failed to deliver FTD and charge you the difference.

TL:DR 🦍 Summary:

-   Dr. T thinks that the difference apes are making is clear when you look at the DTCC and its subsidiaries.

-   We actually have them taking action, to combat the issues we are talking about.

-   Making rules changes acknowledges the problem, and acknowledgment is the first step to solving it.

_____________________________________________________

HOW THE EURO-APES SAVE THE DAY

-   Atobitt

    -   Which is what the rule removed back in the day-- where they removed that mandatory buy-in rule within the US, correct?

-   Dr. T

    -   no, it was always voluntary in the US

-   Atobitt

    -   Oh, good to know.

-   Dr. T

    -   There were some circumstances where this rule was mandatory.

    -   But they're going to make this mandatory in Europe: yes if the buy-in fails the depository will reverse the trade

    -   That's putting pressure on all the DTCC members in all categories because if they have to comply in Europe, they pretty much have to comply here too.

-   Atobitt:

    -   Yea, it's hard to maintain two separate books there

-   Dr. T:

    -   Right-- watching this much more closely, there's so much more going on.

TL:DR 🦍 Summary:

-   Dr.T also speculated that legislation in the EU has the potential to be a driving force for further systemic change.

-   The reason the EU legislation may be a driving force is that they seek to pass legislation to force buy-ins for failures to deliver.

-   If it takes effect in Europe, it could ripple across the pond.

_____________________________________________________

FOR NOW, IT'S GOODBYE

-   Dr. T:

    -   I'm just so grateful for the encouragement that I've received from the [r/Superstonk](https://www.reddit.com/r/Superstonk/) people

    -   I mean, it's just been-- it's what keeps me going

-   Atobitt:

    -   I'm glad to hear you say that

-   Dr. T:

    -   Not the outcomes, because the "what can we do next" is always hard

    -   Because it's very specific

    -   and it's not just one thing that can be fixed that's going to create the BRAND NEW WORLD

    -   There are lots and lots of things that need to be changed, and each time you call attention to one problem, you know the dark pools arise

    -   so there's always this phantom [---]

-   Atobitt:

    -   The big picture is beautiful

-   Dr. T

    -   ---hide it away, right?

    -   So we can talk about doing another AMA

-   Atobitt:

    -   I was actually going to ask you - it's a really good transition.

    -   We could go through some solutions, but honestly, if we have some opportunity to do this again.

    -   I wanted to wrap up my end of this by saying:

        -   I'm sorry you were never able to get to this level.

        -   But now we have a quarter of a million people that are starting to beg and demand answers

        -   And that pitchfork army that you wanted to desperately is here

    -   And my question to you is: would you be open to working, at your own time, and being able to review different posts that might be submitted to you?

    -   We could work on House of Cards 2 and really start to get this stuff ironed out and get the people the tools that they need in order to get this stuff pushed in and get this taken care of

-   Dr. T:

    -   Yeah, and [u/StonkU2](https://www.reddit.com/u/StonkU2/) have a way to send docs to me and point me to the DDs and the god-level DDs?

-   Atobitt:

    -   Due Diligence

-   Dr. T:

    -   Due Diligence, deep Dives

-   Atobitt:

    -   Yup. You learn.

-   Dr. T:

    -   I have trouble, I'm learning-- yes I'm definitely beginning to read hieroglyphics

    -   And just going on the site and finding things out

    -   It's a bit confusing but anyway-- Yes I'm happy to do that as time allows

    -   and also you know there's quite a lot of information in Naked Short and Greedy, thank you for mentioning that

    -   But the other book, [Lessons Not Learned](https://www.amazon.ca/Lessons-Not-Learned-Financial-Markets/dp/1910151238)

-   Atobitt:

    -   I also have that too. Looking forward to reading that one.

-   Dr. T:

    -   So that's for the techies right.

    -   If you're a technical analyst, if you want to look at laws, rules, regulations, the history of how many times have we, you know, bailed out banks and brokers

    -   All that's in there (Lessons not Learned)

    -   But Naked Short and Greedy is a narrative, so I wanted to write and establish more storytelling

    -   But if you want that deeper dive, the other book would be helpful to people

-   Atobitt:

    -   I'm going to keep you open

    -   I'm going to be in contact with you to do that

-   Dr. T:

    -   You do that, yea.

-   Atobitt:

    -   Oh by the way, FYI you've officially been dubbed the "Jane Goodall" of the ape troop now

    -   Thank you very much

-   Dr. T:

    -   Someone called me "Queen Kong" of the Apes

-   Atobitt:

    -   Get used to it-- you're gonna have a lot of names like that

    -   So Dr. T, thank you again so much

    -   I mean, wow, we just blew through that

    -   That was a lot of info in an hour

    -   I appreciate your time

-   Dr. T:

    -   That's why the book is so thick

-   Atobitt:

    -   Well, I appreciate you so much. Thank you very much.

    -   And thank you everyone for tuning in.

    -   Look forward to the follow-up coming out-- shouldn't be too long and we'll be in touch, have a great day

-   Dr. T:

    -   Thanks, you too. Bye-bye.

TL:DR 🦍 Summary: We love Dr. T, Queen Kong

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One final thank you here at the end, this one goes out to all the mods that helped put this together:<https://www.reddit.com/r/Superstonk/comments/n1kjaa/official_mod_appreciation_video_for_dr_t_aka/>
