🏛 TAR Section on SIPC

[JFWooten4]

Dive into primaries for the undercoverage prevelant, which ought start at the abismally / laughably low initial contributaiton rates.

The amount of SIPC funding is shockingly small.
— David Webb

see also parallel community sentiments

[JFWooten4]

6days (pending GH signup) might be well-equipped for this one

[JFWooten4]

Ideally, this would implicate [this issue], whereby the decentralizing self-custody ethos gets introduced as a foil to this unprecedented failure of risk management.

Originally posted by @JFWooten4 in #3

Will retroactively point this back to the community collaboration in the next letter. The specific insurance risks and inadequacies are their own hill to climb in establishment. Notwithstanding, I'll sow the seeds for local self-custody as a central stability factor 🤝

[tehchives]

I'll sow the seeds for local self-custody as a central stability factor

You may already be prepping to frame it this way but I do think it's helpful to remember that the only insolvency risk a share held in self custody is exposed to is the actual issuer going bankrupt - and even then, that's not an ownership issue! Perceived market value would go down, sure, you'd still retain that full ownership into and through bankruptcy as displayed in equity lists released for credit review purposes.

[JFWooten4]

Thanks for this point, Chives! I was inspired¹ recently by some bankruptcy filings that showed investor addresses as redacted for privacy purposes, albeit on file with the court itself.

Yeah, it's precisely that isolation from intermediary insolvency that allows greater stability and, by extension, less of a need for Federal deposit insurance. Interestingly, as discussed a long time ago in biweekly nighttime chats, the dues for SIPC used to be comically small—like $100 a year.²

But then, when the brokers started lending them out for more interest income, the risks started skyrocketing along with the SIPC premiums. This mirrors almost exactly the development of FDIC into now sucking—what is it—almost 40bps a year on a normal account? If we can draw the connection here, then we can extrapolate into brokers acting as banks.

And if we can do that, then there's infinite available securities as per Dr. [name here of prof in TAR2 that did the original rehypothecation comment in 2008].³ All tying back to FTDs and counterfeit shares per Phantom Shares.

Footnotes

1. Well, as much as you can be by companies failing. ↩

2. Would be awesome to get a source on this. ↩

3. I forget immediately and would need more work on this item, but it was probably not the Counterfeiting Stock 2.0 person. This comment comes to mind but wasn’t it either. ↩

[tehchives]

Were you thinking of Dr. Jim DeCosta? He commented on some of these issues very early, 2005 ish. A grandfather of these efforts to be sure.

File # S7-23-03 (a) https://www.sec.gov/rules/proposed/s72303/decosta122203.htm

File # S7-23-03 (b) https://www.sec.gov/rules/proposed/s72303/jdcosta012204.htm

File # S7-23-03 (c) https://www.sec.gov/rules/proposed/s72303/decosta123003.htm

NASD-2005-112 https://www.sec.gov/rules/sro/nasd/nasd2005112/jdecosta112405.pdf

[JFWooten4]

Yep, that's the one—thank you!!

This single event will increase the levels of naked short selling abuses we currently see many, many-fold as "failed deliveries" will be the norm and not the exception, and abusive and intentional failed deliveries will be camouflaged. [sic]

in S7-23-03 (a)

Incredible memory to say the least, and so glad to get that one lined up for down the road 🔖