What is Rule 801?
Rule 801 would allow the NSCC to "collect, when applicable, supplemental liquidity deposits to NSCC’s Clearing Fund
(“Supplemental Liquidity Deposits,” or “SLD”) on a daily basis, rather than only in
advance of the monthly expiration of stock options"
This video is about 2 weeks old as of this writing (4/2/2021) but it explains Rule 801 pretty well.
Here is where it becomes confusing there are two Rule 801's.
OCC-801 (OCC stands for Options Clearing Corporation)
also known as "The Skin In The Game Rule"
NSCC-801 (NSCC stands for National Securities Clearing Corporation)
NSCC-801 is the big one that addresses Naked Shorting
"The 801 will allow the NSCC to assess the risk of members daily and let them demand a higher Secondary Liquidity Deposit (SLD) daily if the member would risk defaulting. The 801 basically makes HF’s and MM’s pay more if they are playing too risky and can let the DTCC liquidate the member’s positions if it could risk the NSCC’s ability to complete that day’s trades."
Credit goes to Reddit user u/Swimmerchild who actually figured this out and wrote this up
This would require that hedge funds who are deemed to be in risky positions will be held accountable every day rather than every month. They would be required to place deposits based on the evaluated risk of their position thus taking liquidity away from them on any given day.
Submit a Comment in Support of Rule 801
All submissions should refer to File Number SR-NSCC-2021-801
Use the Commission’s Internet comment form
Send an e-mail to firstname.lastname@example.org. Please include File Number
SR-NSCC-2021-801 on the subject line.
In both instances, the change removes the return of assets to the participant’s “general free account”. As far as the dynamic between the hedge funds short selling and retail traders is concerned, these changes imply the following:
Effectively, these and other proposed tweaks to the ruleset would make short-squeezing more viable in the future because opposing trading parties would not be trading in a total fog of war. In fact, just as consumer protection legislation has clauses on legalese intelligibility for contracts, the proposed rules would dissipate such fogging when it comes to retail trading. DTCC submissions are usually approved by the SEC within a week.
Comments on Rule 801:
Props to this commenter: https://www.sec.gov/comments/sr-nscc-2021-801/srnscc2021801-8579917-230884.htm
Reddit Rule 801: 1 Step Closer
The answer is we don't know but let's do some research and math to make a reasonable guess.
Don't worry Trade Club has done the research and math already.
The publication date is March 18, 2021. https://www.sec.gov/rules/sro/nscc-an/2021/34-91347.pdf
Page 61 (see PDF below) states comments can be submitted: "21 days from publication in the Federal Register" this puts us at April 8th, 2021.
From the video at the top of the page that you watched earlier, it could take 10 business days if no rebuttal. That would put us around April 18th, 2021 to April 22nd, 2021 at the earliest.
Realistically though we are talking about a lot of money out of the hands of those with a lot of money. We fully expect there to be a rebuttal period. Let's assume that rebuttal period is given 30 days. That would put us into Late May early June time frame.
Trade Club will continue to follow the progress of Rule 801 and provide updates.
Thanks to Reddit User u/Majestic_Ad_4371 for sharing this video.
This is a great video we recommend you watch in it's entirety. If you want just the highlight real start at 24 mins 30 seconds.
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