DJ, here is a go at the explanation
Market Maker short exemption and down tic rule eliminated.
In the early to mid 2000s, ETFs started to become very popular. Banksters argued to the regulators that they needed the ability to short stocks at any time, any price and in any quantity so they could maintain the price of the ETF relative to the underlying stocks or securities the ETF represented.
This was a legitimate issue and to accommodate the Banksters and their ETFs, the down tic rule was eliminated. Previously a stock could only be shorted at the last price, but with the down tic rule removed, a stock or ETF could be continuously shorted at lower prices to drive it lower, so – at least in theory the relationship between the ETF and relative securities could be maintained.
The regulators also came up with the market maker short exemption rule. If a Bankster is making a market in a stock, they are not required to report short sales, but their position is suppose to be relatively flat on a given day or certainly over a few trading days.
This was not a problem until Banksters and Market Makers started to abuse these new rules and powers. They first targeted the OTC market, where they shorted illiquid stocks lower and made profits on their short sales. With the advent of computer trading, they started applying this trading method to all U.S. Listed stocks when trading conditions appeared in their favour.
If you remember back in 2008, regulators banned short selling on over 100 stocks, mostly financial stocks to try and stop the downward spiral this short trading was causing. Around the same time, the Banksters started to move into Canadian stocks on the TSX and then after to TSXV stocks that can be very illiquid and easy to manipulate. The same thing now occurs on the CSE too.
Currently with computer trading every listed stock is a target of these unregulated and unreported short selling strategies. Often when a stock becomes a short target, other Banksters and traders will jump on board and short a stock. This is when you see and increase in the reported short volume as the last period reported on Zonte showed 87,000 short volume. Keep in mind that this may not show market maker shorting.
At least in the U.S., the short volume is reported on a daily basis, so one at least knows if the stock they invested in or are trading in was subject to short trading that day. In Canada it is only reported twice a month, so you only know the stock was shorted sometime in that 15 day period. Rather useless information.
The other advantage Banksters and Market Makers use is front running trades on other trading platforms. I will get into detail in a separate post.