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This is an automated archive made by the Lemmit Bot.The original was posted on /r/Superstonk by /u/WhatCanIMakeToday on 2026-08-03 13:00:12+00:00. We all saw the OCC memo saying the NSCC noped out of settling GME WarrantS (GMEWS) last week [OP on X, 1] on July 30 (effective immediately); on the last trading day to get in a settled trade before the C35 deadline for the DTCC’s 6/29 Market Disruption [OP on X]. Digging Deeper, VERY BULLISH! When the NSCC said they’re no longer settling GME Warrants, the OCC memo said it was “Pursuant to OCC By-Law Article VI, Section 19” (blue highlight) [2] that GME Warrants settlement will be directly between brokers going forward. We can look up the Article VI, Section 19 of the OCC By-Laws [OCC PDF] and HOLY SHIT this section is literally titled “Shortage of Underlying Securities” when an event “threatens to reduce the available supply of the affected security to a level insufficient to permit performance of the exercise settlement obligations with respect to outstanding option contracts for the affected security”: There are not enough GME Warrants so the NSCC and OCC are making brokers figure shit out between themselves when options with GME Warrants are assigned or exercised. https://i.redd.it/i1mrw0l572hh1.gif Digging deeper into the OCC By-Laws to see what the OCC will do, we immediately see that the OCC says they can take 4 actions; though the 4 actions simply boils down to these 2 that we see in the OCC Memo (above under “Broker-to-Broker Settlement”):
Subsection (b) is not that interesting it's as for a situation where enough of the underlying security (i.e., GMEWS) become available. If this happens (e.g., if GameStop issues more warrants), then use the available supply to settle. Subsection (c) is very interesting as it’s for when “there is no reasonable likelihood that a sufficient supply of the underlying security will become available within the foreseeable future” (e.g., no more warrants from GameStop). In this case, the OCC will “fix cash settlement prices” which means the OCC determines how much each warrant is worth and then Clearing Members pay up to settle debts. FU Pay Me! However, there’s a catch. The OCC decides how much each warrant debt is worth (“provided, however, that the Corporation may fix the final settlement price or adjust a previously-determined final settlement price”) allegedly in the interest of fairness (“as necessary or appropriate to achieve fairness to buyers and sellers of such futures”). I’m pretty sure retail already knows where their thumb pushes on the scale of justice. At least retail does have a record of the OCC’s policy on our side, right? Under “... Interpretations and Policies”, the OCC has a section with guidelines on what they’re supposed to do. It’s the OCC’s policy [.01] to settle everything through the proper clearing corporation, but “in those situations in which the application of that policy would, in the judgment of the Corporation, be inequitable or impractical, the Corporation may take such actions, consistent with the By-Laws and Rules, as it deems equitable and feasible in the circumstances and will be guided in accordance with the provisions of Interpretation and Policy .02”. Under “Interpretation and Policy .02” for when things are “inequitable or impractical”, there’s a part for “Where Shortage Appears to be Permanent” which says the OCC will “fix cash settlement prices to be paid in settlement”. There is also a policy section for “Fixing of Cash Settlement Prices” which generally says to use the market value (where available). So far so good… Until we get to the policy section for “Determination of Market Value of Underlying Security” where if the OCC determines there are special circumstances (e.g., MOASS) that would make the policies “unfair to exercising Clearing Members or assigned Clearing Members [the OCC] may use a different method to determine the market price of the underlying security”. 🤦 The OCC can do whatever they want if it’s unfair to Clearing Members. Lastly, there’s also a section for “Situations Not Otherwise Provided For” (MOASS might fit that description) where the OCC decides what the equitable final [cash] settlement prices will be fixed at. With all this OCC Policy about doing what’s equitable [LII, Dictionary], fair, feasible and practical, keep in mind that the OCC’s Board of Directors is filled with people connected to Bank of America, UBS, Goldman Sachs, Nasdaq (#2), Apex Clearing, Intercontinental Exchange (ICE), JP Morgan, Jeffries, CBOE, Schwab, NYSE, and Citadel. 👎⚖️ At least the OCC Policy says the starting point for how much we’ll get paid is based on the market value of the GME Warrants. OCC Now Picking Winners and LosersNow that the OCC has forced all the brokers to settle exercised options between themselves, this means that exercising Clearing Members have to settle directly with the assigned Clearing Member (see Shortage of Underlying Securities above, red underline) possibly requiring a buy-in; with OCC handling the assignment. The OCC picks who is assigned to deliver GMEWS on a GME1 option assignment/exercise. The OCC picks the loser for every GME1 options assignment/exercise. So unlike Squid Game players who choose their own order for crossing the glass bridge, the OCC [3] controls who goes next in line and, thus, who is most likely to fall first and who is most likely to make it across. [4] BUT "The Loser" DOES NOT DEFAULTOddly, the loser here does not default despite failing to deliver on contractual obligations. Thanks to a 2006 Proposed Rule Change by the OCC (approved May 2007, just a bit before the 2008-2009 Great Financial Crisis [5]) [Federal Register] actions by the OCC under Section 19 of Article VI (including suspending settlement obligations) in the event of a Shortage Of Underlying Securities “would not be considered an event of default [and] would not allow a Clearing Member to initiate the close-out netting procedures” [Id.]. Squid Game (and its dire consequences) is only for the poors. Footnotes [1] See also: [SuperStonk](https://www.reddit.com/r/Superstonk/commen... Content cut off. Read original on https://old.reddit.com/r/Superstonk/comments/1vecr6s/have_you_got_a_warrant_no_fu_pay_me/ |
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