AMC (Definition)
What is ICC-2021-007?
Its a new proposal that recently passed on May 18th.
This new proposal gives the brokers margin flexibility for hedge funds who have a short position is stock that are deemed risky. If brokers decide that a position is too risky they can increase the equity required in an account. The new proposal also ensures that regulators have some sort of collateral from all the shorting (this should reduce the amount of naked shorting and phantom shares). Once they regulators start increase margin requirements some hedge funds should start getting margin called. With all this in mind we can expect hedge funds to start covering the short positions. Hedge funds with the most leverage will likely be the first ones to get their margin call. In summary regulators are aware of the shady practice and are trying to limit their liability. With COVID-19 under control in most areas going back to the movies is in the cards for regular moviegoers meaning that AMC stock is a potential value play and no longer just a value play. Regulators know the risk of shorting a stock that could potentially rise.
Its a new proposal that recently passed on May 18th.
This new proposal gives the brokers margin flexibility for hedge funds who have a short position is stock that are deemed risky. If brokers decide that a position is too risky they can increase the equity required in an account. The new proposal also ensures that regulators have some sort of collateral from all the shorting (this should reduce the amount of naked shorting and phantom shares). Once they regulators start increase margin requirements some hedge funds should start getting margin called. With all this in mind we can expect hedge funds to start covering the short positions. Hedge funds with the most leverage will likely be the first ones to get their margin call. In summary regulators are aware of the shady practice and are trying to limit their liability. With COVID-19 under control in most areas going back to the movies is in the cards for regular moviegoers meaning that AMC stock is a potential value play and no longer just a value play. Regulators know the risk of shorting a stock that could potentially rise.
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