It's Just a Bug Bro Part 2: Loopholes Edition
=============================================

| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/hell-mitc](https://www.reddit.com/user/hell-mitc/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/mqca35/its_just_a_bug_bro_part_2_loopholes_edition/) | 

---


[DD 👨‍🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)

I wrote the It's Just a Bug Bro DD a few weeks ago to hopefully keep people from thinking the market might have glitches. Seems to have worked, but I don't think any of us have thought it was a bug to begin with. [Here](https://www.reddit.com/r/Superstonk/comments/mlqedv/its_just_a_bug_bro/).

And here we are. IEX goes down (Ill link why they seem legit), price tanks a bit, the endless noobs asking "OmG Whyyyy" instead of reading and researching. Well this finally seems to be the stretch guys. The stretch where all the confirmation bias cant get any more confirming and we are honestly just looking for some way it might not actually be real and we will all get fucked over (just me? ok moving on).

We are finally gazing at the soul of the financial sector, who is really pulling the strings and why it is all occurring. Because no one did this out of the goodness of their heart to help retail do better, they are probably kind of pissed we are along for the ride, because chances are this will change the financial sector as we know it, forever (I see more digital currency in our future. Jesus that's a lot of digital currency).

Something crossed my mind yesterday about how "Cede & Co" will pay. Well shit, we really need to find out who these fucks are so they don't take our bags and make off before we have the chance to claim our prize. Well, down the DTCC rabbit hole we go.

From here on out I will refer to DTC, NSCC, etc. as DTCC, since they are all subsidiaries of DTCC. Their functions may be separate, but they act under the premises of the market itself.

[![r/Superstonk - It's Just a Bug Bro Part 2: Loopholes Edition](https://preview.redd.it/v48kzujaxzs61.png?width=600&format=png&auto=webp&s=b2fc1ff7c734f0172df228d416cd5079ae15c8bc)](https://preview.redd.it/v48kzujaxzs61.png?width=600&format=png&auto=webp&s=b2fc1ff7c734f0172df228d416cd5079ae15c8bc)

When you go into your little box and click that buy button, apart from gambling away the majority of the cash you put in, some magic happens behind the scene.

I started reading DTCC docs and just duckducking combinations of buzzwords and came across some fun little SEC docs.

<https://www.sec.gov/rules/concept/2015/34-76743.pdf>

Here's the first one. It basically starts to outline how the clearing and assignment of securities occurs. But when you go looking specifically for "Cede & Co", it goes on a little tangent. This footnote kind of started to tie things together with who these people really are.

[![r/Superstonk - It's Just a Bug Bro Part 2: Loopholes Edition](https://preview.redd.it/i79r2ltkyzs61.png?width=589&format=png&auto=webp&s=a6d1ef7f6459dd6aa7f4561c477eb75894bc83db)](https://preview.redd.it/i79r2ltkyzs61.png?width=589&format=png&auto=webp&s=a6d1ef7f6459dd6aa7f4561c477eb75894bc83db)

Now this is interesting. Partnership. Partnership Nominee. Rather than Corporation. These seem to have made "Cede & Co." a partner *network* with the DTCC so that transfers didn't have to occur outside of the DTCC when they went through your broker/bank. Because that would just create another layer of ownership and transference I assume? And, because of the little document listed at the end there.

<http://www.tax-freedom.com/mediacontrol.htm>

This document makes me a little horny. Because it shows the basis behind "Cede & Co." was actually to not allow (or hide, depends how we are going to look at it) big banks from gaining control.

" The FCC did not know that the banks were in gross violation of regulations until the banks told the Commission about it." Sound familiar? Seems like we really wont know how short these organizations are until they actually come out and say it themselves (haha yeah, ok).

Summarized, this goes back to 1974 when " The role of institutional investors is of course not limited to the acquisition and sale of stock and the right in many cases, to vote it. Some institutional investors make loans to companies in which they invest, or provide insurance coverage. Their representatives often sit on the companies' boards of directors. Sometimes institutional investors help facilitate or block mergers... no individual or bank was permitted until last year to own more than 1% of the stock of other broadcast companies with 50 or more stockholders... In 1972 the commission raised the ownership limitations for banks from 1% to 5%. It raised the limit because so many banks were in violation of the Commissions 1% regulation that, to comply with it, 19 banks would have had to divest themselves of $976 million in stock in 25 companies. "

Obviously behind this wall of text, the banks were in GROSS VIOLATION of how much ownership they could have of media organizations. They literally changed the laws to hopefully keep them in compliance. We have to realize that this was the means of conveying information to the masses. If you controlled the media, you controlled the narrative. On to 2021, if you control the data, you control the market, you control the money. What better way to line your own pockets than to rip off the class of investors that don't understand how the data flow works?

Here is where the "Cede & Co." statement gets fun. I can only infer from the wording in all this that "Cede & Co." isn't a company, but *the banks themselves*. Here's your little loophole. DTCC aren't passing the buck to any organization, they are passing it to the banks themselves. I have a feeling this is actually why we haven't seen and margin calls yet.

Basically this isn't retail vs. hedgies. This is banks vs. the people. These banks (based on collateral reuse and repos) have been loaning on margin (if I read it correctly) with leverage of only 8%.

<https://www.imf.org/en/Publications/WP/Issues/2017/05/08/Collateral-Reuse-and-Balance-Sheet-Space-44892>

If this is true, then the banks are going to allow the hedge funds to run wild with this until retail gets bored. The banks can't afford to go tits up, everything will go away. The elite class that owns these institutions will be bled dry. We saw it in 2008. They wrote the rules on stuffing bonds with shit loans. They are doing it again, but with hedge funds that no longer have collateral. I feel the only thing saving us is massive whale institutions who have knows this and are trying to expose it now because retail is kind of in the loop (unfortunately, a lot of people are still going to take a bath at the end of this).

I don't have much more info than this. There are YEARS of documents to pour through. Other than that they technically hold our shares in trust. Some of these are probably on our side. Some *cough* 212 *cough* are going to vote how they want, no matter what the shareholders interest is (check out link 2 - it ties together how our shares are actually held).

I think we hit the nail on the head with the OTC pool routing, and IEX being meant for retail. Found this tasty little article which caused some upset (I cant find the book though).

<https://finance.yahoo.com/news/nyse-plans-nyse-american-counter-flash-boys-exchange-153644266--finance.html>

Here's the references. Someone check my work please because I am not a financial advisor, lawyer or anything like that. Just someone who likes equality for all and believes in natural selection.

1.  <https://www.sec.gov/rules/concept/2015/34-76743.pdf>

2.  <https://www.sec.gov/reportspubs/investor-publications/investorpubsholdsechtm.html>

3.  <https://www.dtcc.com/settlement-and-asset-services/issuer-services/how-issuers-work-with-dtc>

4.  <https://www.sec.gov/comments/s7-14-10/s71410-232.pdf>

5.  <https://www.lawinsider.com/dictionary/certificate-depository-agreement>

6.  <https://www.investor.gov/introduction-investing/investing-basics/investment-products/stocks>

7.  <http://www.tax-freedom.com/mediacontrol.htm>

8.  <https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2093&context=vlr>

9.  <https://www.sec.gov/rules/proposed/s71903/s7-19-03-406.pdf>

10. <https://www.dtcc.com/partners/directory>

11. <https://finance.yahoo.com/news/nyse-plans-nyse-american-counter-flash-boys-exchange-153644266--finance.html>

12. <https://www.imf.org/en/Publications/WP/Issues/2017/05/08/Collateral-Reuse-and-Balance-Sheet-Space-44892>

Some are doubled, but it's all there. I keep finding more in the web of the financial sector. All we really can do is hold. Personally I keep buying more then it dumps so I might not buy more for a week.

I keep trying to figure out based on my last DD how DTCC and ICE are fighting. I cant wrap my head around who is the most beneficial owner of the data. But if we hope to have a free and fair market, one will need to consolidate the other I would think (which would have already happened if they weren't fighting?) Not sure. I honestly cant quite figure it out. Or if having one is good or not. I dunno. But we shouldn't bash the DTCC blindly, it almost seems like they have been good for us in this.

The only other thing I can say is, the Apex merger doc seems to be info that will cause us to go crazy and hate the system all together. The system isn't necessarily broken, but the players have been gaming the system for their advantage. A lawsuit is a lawsuit is a lawsuit. Until the court ruling, it is an accusation, and if it is fluff, then it soils the name of 30 corps that might be good to us in this. But again I don't know, we need more research.

Correct anything that's wrong with this, or call me out. I don't know everything or if it makes sense. Being skeptical is a part of it.
