💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/MommaP123](https://www.reddit.com/user/MommaP123/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/oumz7g/cash_account_shenanigans_allowed_by_the_dtcc/?utm_source=share&utm_medium=web2x&context=3) | 

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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)

Old Lady Ape here,

I have been trying to get the word out about Direct Registration (while I fail horribly at learning how to use Reddit), and I do think a lot of apes have finally heard about it and are considering it in their own personal financial planning.

But I have also heard many times that apes don't understand what makes Direct Registering of stocks so important. They have their stock in a cash account at a reputable broker and stock in cash accounts are supposed to be "segregated" and protected from being shorted... what else could go wrong? So lets get into this shall we.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/zaquupd46de71.png?width=394&format=png&auto=webp&s=44532062e5ec76fa379ac27751535946909c3497)](https://preview.redd.it/zaquupd46de71.png?width=394&format=png&auto=webp&s=44532062e5ec76fa379ac27751535946909c3497)

I made a meme. Does that make me a zoomer now?

First of all and maybe last of all, you think you have stock in a cash account at a reputable broker

And you do...sort of...We have heard from many sources that GME is literally rolling in FTDs, Failure to Delivers.

Who do you think the GME stock has failed to deliver to?

You might think 'not me, I can see my stocks in my account right now... see.' ...But so can everyone else. The DTCC who is the registered owner of your stock gives each broker the ability to entitle a share into your account while it waits on actually delivery of that share. Crazy right? Your stock might not be there, in fact, if you purchased it within the last 30 days, it probably isn't.

But I have a Cash account!

I know, I know... let's back up here a minute.

When you opened your broker account (maybe you transferred from the Robbing of Hood) you probably specifically signed up for a cash account because we all now know that Margin is an empty hollow hole of corruption.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/mmh6a0rg7de71.jpg?width=642&format=pjpg&auto=webp&s=a5adfe26521fd4246ed92eeddb24655553fa1331)](https://preview.redd.it/mmh6a0rg7de71.jpg?width=642&format=pjpg&auto=webp&s=a5adfe26521fd4246ed92eeddb24655553fa1331)

cash account vs. margin account

But also probably because you know that shares held in a cash account have certain protections that Margin accounts don't: like not being able to be shorted out from under you, because of the Customer Protection Rule, [SEA Rule 15c3-3](https://www.finra.org/sites/default/files/SEA.Rule_.15c3-3.pdf) which requires all shares in a cash account and 140% above collateral in margin to be in the physical possession or control of your broker.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/mc3o3j5p7de71.jpg?width=660&format=pjpg&auto=webp&s=db3c0907040013ecad9e189be1a044f3d2ca6aee)](https://preview.redd.it/mc3o3j5p7de71.jpg?width=660&format=pjpg&auto=webp&s=db3c0907040013ecad9e189be1a044f3d2ca6aee)

Physical possession or Control

But what you may not have known, is that there are lots of ways that your broker can be in "control" of your shares. Would you like to hear about some?👀...

I guess that's a yes.

1.  If all else fails, your broker can just borrow a share, as long as the fail to deliver lasts long enough. What's long enough? 30 days, but that's just the first round of juggling

2.  Now the real magic is in this little number.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/d1pvit5z7de71.jpg?width=688&format=pjpg&auto=webp&s=526077f0083e30fe98ff58dc4dfa4b14e99b4084)](https://preview.redd.it/d1pvit5z7de71.jpg?width=688&format=pjpg&auto=webp&s=526077f0083e30fe98ff58dc4dfa4b14e99b4084)

other.... yes other

So what other organizations are considered in good control of your shares... Here's a few

-   SAMs- I'm not exactly sure what this program does, but it looks suspiciously like it rips up ETFs and puts them back together. Sounds safe.... right?

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/gto806l28de71.png?width=646&format=png&auto=webp&s=2b153dee5be317ce517fe052fbab1caf1508e33b)](https://preview.redd.it/gto806l28de71.png?width=646&format=png&auto=webp&s=2b153dee5be317ce517fe052fbab1caf1508e33b)

SAMS- not the warehouse

-   SBP- Ah, the good old stock borrow program. Supposedly this little rehypothecation pool was closed in 2013, but the SEC left it named as a place of good control in the regs just in case they wanted to bring it back. Here you see that securities under control may actually be in the Anticipated Delivery Program for an additional 14 days before having to be called back to fill in for an FTD.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/rb3xghuy8de71.png?width=677&format=png&auto=webp&s=a2f4f50987f01e52362b36f4affe79961c4b586f)](https://preview.redd.it/rb3xghuy8de71.png?width=677&format=png&auto=webp&s=a2f4f50987f01e52362b36f4affe79961c4b586f)

I guess T+2 was just a meme

-   Obligation Warehouse- Now this program is too cool to be named in the Customer Protection Rule itself. It works like a clean up crew for the clean up crew. This program is only mentioned surreptitiously in the Rule through mention of a program called RECAPS.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/qmrf6mt59de71.png?width=638&format=png&auto=webp&s=c23125e6c96628a4e4e9f6b4c0b4e97b8c95b1ce)](https://preview.redd.it/qmrf6mt59de71.png?width=638&format=png&auto=webp&s=c23125e6c96628a4e4e9f6b4c0b4e97b8c95b1ce)

Recaps- redates and reprices FTDs

If your shares for your cash account fail to deliver in the CNS, Continuous Net Settlement, then your share gets to make a little vist to the [obligation warehouse](https://www.federalregister.gov/documents/2010/12/29/2010-32730/self-regulatory-organizations-national-securities-clearing-corporation-order-granting-approval-of-a). There it will be given the full spa treatment of being repriced and redated to get off that old failed share smell. Remember when I said the broker had 30 days to borrow or buy in your share if it failed? Well guess what just happened to that day counter.

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/lafzdq5d9de71.jpg?width=606&format=pjpg&auto=webp&s=eefef487cf41ada9680137040f0de0dd4f83937d)](https://preview.redd.it/lafzdq5d9de71.jpg?width=606&format=pjpg&auto=webp&s=eefef487cf41ada9680137040f0de0dd4f83937d)

Introducing the Obligation Warehouse!

These fails are matched to the entity liable for the share but without the customer wondering where their share is, there is no pressure to actually buy in the fail. The old RECAPs program repriced and redated fails every quarter but the new Obligation Warehouse does it more frequently than that, about twice a month, I believe. Isn't that special....

So that 30 day buy in requirement is pretty much a joke as these obligations are recapped continually until they are eligible to be filled in the CNS.

So while apes are hunting all over Brazil for the naked shorts, I'm guessing the long shorts are hanging out right here, in this special little warehouse, "Where FTDs go to die"- Wes Christian

[![r/Superstonk - 💎👐Cash account shenanigans allowed by the DTCC: exploitable loopholes in the Customer Protection Rule and the Obligation Warehouse/ FTD spa♾🚀](https://preview.redd.it/y2n4qrumade71.png?width=537&format=png&auto=webp&s=238d229aecff781bd1bdb039b6586b03f48b7eb8)](https://preview.redd.it/y2n4qrumade71.png?width=537&format=png&auto=webp&s=238d229aecff781bd1bdb039b6586b03f48b7eb8)

RIP

And whose FTDs are they? They are mine, they are yours. Brokers comingle our shares in a "segregated" account, 1 share is everyone's share and 1 fail is everyone's fail.

But Direct Registered shares cannot FTD, a share must be found and delivered on the book of register. It's +1 for you and -1 for the DTCC, no warehouses, Sams, or Pools (unless you want one of course ♾👀) involved, smooth brained ape simple.

Ape no fight Ape! Please be gentle 🤗🦍💎👐🚀♾

TLDR: shares bought in a cash account are not safe from being a FTD. Even if the shares show up in your account, they could be being stored in the Obligation Warehouse where the FTD is repriced and redated.

This article from The Intercept helped me connect the obligation warehouse to Recaps and to the legally available programs considered "control" of securities. Its a multi part long article about penny stock manipulation but interesting. <https://theintercept.com/2016/09/24/naked-shorts-cant-stay-naked-forever/>

*This is not financial advice. Registered shares may be difficult to sell in a MOASS situation. Please do your own research before making any individual investor decisions.

Here are some of my posts about Direct Registering shares to help with that.

<https://www.reddit.com/r/Superstonk/comments/o76au8/direct_registering_shares_what_it_is/?utm_source=share&utm_medium=web2x&context=3>

<https://www.reddit.com/r/Superstonk/comments/o5f8zy/preliminary_information_for_direct_registering/?utm_source=share&utm_medium=web2x&context=3>

<https://www.reddit.com/r/Superstonk/comments/oix5zk/step_by_step_method_for_direct_registering_shares/?utm_source=share&utm_medium=web2x&context=3>

FUD patrol: I am a fan of registering shares and have done so with my forever♾hodl shares. I am not telling anyone do anything, I am only providing publicly available information for informed decision making. This is nothing but Buy and Hodl but in my own name instead of the DTCCs name. Also, I have slowly provided this information in an attempt to thwart off the idea that there is any urgency to register shares. There isn't! This is not urgent! Take your time and think it through.
