The SEC just released its latest update for Fails-to-Deliver data and it sheds a very bright light on what was going on during the GameStop (GME) debacle in January (the data is only released every two weeks so this is the first opportunity to see what was going on. Bloomberg reports, for a number of days during the GME short-squeeze, there were more than a million shares FTD daily (peaking with around $359 million worth of shares on Jan 28th).
About 2.1 million GameStop shares failed-to-deliver on Jan. 26 before falling to 138,179 on Jan. 29, the day after Robinhood and other brokerages began restricting trading in so-called meme stocks.The fact that GME made it to the Top 10 list on SEC's FTD data suggests more than a simple SNAFU. It reinforces what many have attempted to dismiss as 'unproven conspiracy theory' - the fact that a number of investors were (synthetically or not) naked short this stock.As Bloomberg points out, short sales - when an investor borrows shares, sells them and then tries to buy them back at a lower price to profit from the difference - are an everyday market occurrence. Naked short selling, the illegal practice of selling shares that aren’t known to exist, is just one possible cause of a failure-to-deliver, with more quotidian reasons being hu...