Shorting and Indian capital markets

&gt; <i>While everyone is celebrating retail traders winning over a large hedge fund in this case, it rarely ever plays out this way. Most commonly, retail ends up losing money when there is excessive speculation.</i><p>This is the only passage anyone with too much at stake (than they can afford) in this short needs to read.<p>Other than that, I believe industry insiders &#x2F; traders are missing the mark in that the current dynamic is also fueled in part by a million-strong (if not more?) rejecting the <i>fundamentals</i> and pumping cash in to businesses that Wall Street&#x27;s hive mind has decided has no job being in existence.<p>AMC made a billion dollars during the rally [0] (and it is not lost on me that this capital would be dumped into parachute payments and bonuses to c-suite and nothing&#x27;s going to trickle-down). In the off-chance AMC makes the capital work, then, that&#x27;d have vindicated retail, but it kind of seems too optimistic but that&#x27;s the whole point.<p>[0] <a href="https:&#x2F;&#x2F;movieweb.com&#x2F;amc-theatres-raises-one-billion-dollars-avoids-bankruptcy&#x2F;" rel="nofollow">https:&#x2F;&#x2F;movieweb.com&#x2F;amc-theatres-raises-one-billion-dollars...</a>

I am glad they addressed the philosophical question of whether shorting the stocks should be illegal.<p>I have more confidence in our equities markets because of the existence of short sellers. I’m glad to know there are people researching companies that are not being honest about their financials.<p>If there were another way to incentivize finding these types of companies without short selling, I would be interested.

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life.<p>All of the ingredients are there.<p>1) Use social media to organize motivated groups of people<p>2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally.<p>3) Cause world wide market volatility. In this case, it&#x27;s moving institutional investors out of the market, eventually causing a lack of liquidity that reveals structural problems. In other words, How many Lehman Brothers does it take to cause a 2008 type crash?

A lot of movement in GME was driven by call options, which is generally available in all markets. However, absence of overnight short positions would definitely diminish the trigger GME needed to get short squeezed and become volatile in the first place.

In reference to the GME&#x2F;WSB fiasco the issue isn&#x27;t so much the shorting itself but the large number of “fails-to-deliver”.<p>This was happening since early December. It looked suspicious and was reported to the SEC. Read comments for receipts.<p><a href="https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;wallstreetbets&#x2F;comments&#x2F;kr98ym&#x2F;gme_gang_we_need_to_complain_about_naked_short&#x2F;?utm_source=share&amp;utm_medium=ios_app&amp;utm_name=iossmf" rel="nofollow">https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;wallstreetbets&#x2F;comments&#x2F;kr98ym&#x2F;gme_...</a>

The SEC should protect the hedge funds by preventing them from short selling

I am naive here, can someone explain what is the economic utility of a stock market ?<p>For example, its easy to understand utility of food, cloths, car, house, money. But I am not able to find a reason about stock market existence for day-to-day trading, where secondary stocks are traded daily after IPO. It seems none of the day-to-day trading money&#x2F;profit ever goes back to business to help them to improve that business.

Zerodha (top Indian broker) posted an article earlier which explained why the Indian brokerage industry has very few avenues to make revenue: <a href="https:&#x2F;&#x2F;zerodha.com&#x2F;z-connect&#x2F;rainmatter&#x2F;the-race-to-zero-can-indian-brokerage-industry-survive" rel="nofollow">https:&#x2F;&#x2F;zerodha.com&#x2F;z-connect&#x2F;rainmatter&#x2F;the-race-to-zero-ca...</a><p>The lack of any mechanism for payment for order flow is quite interesting - how do market makers get incentivized to provide liquidity in such situations? Or asked another way, are American market makers being subsidized by retail traders?

How are the futures hedged if shorting is not allowed? Does that mean every futures seller is effectively unhedged?

&gt;&gt;&quot;In some of these stocks, the total quantity of stocks shorted (stocks borrowed and sold + using derivatives) is much more than the free float or the total number of shares held publicly. &quot;<p>So, they short more stocks that exist. OK, I will not ask why this is allowed, but how is this done?

What reddit guys are doing should be called MEMEntum &amp; not momentum