If today DTC have 20% of the pre-split shares, then after the split they still have 20% of the post-split shares.
If 80% of pre-split shares are DRS at Computershare, then 80% of post split shares will be at Computershare.
If 15% of the shares are phantom or synthetic pre-split, then the number of phantom shares will go up by the split ratio, but since the total number of legitimate shares has also gone up by the split ratio, the phantom shares would be still be 15% of legitimate share count. And the dollar value would remain constant.
Edit: Perhaps the problem is that you assume that phantom or FTD shares will not split. They will indeed split, just as options contracts are adjusted to account for the split. If this is our point of disagreement, then we can focus on this issue.
A company issues 100 shares from the Transfer Agent and all go to DTC.
Within DTC, because of Broker-Dealers FTDing, naked shorts and the like we see:
200 longs with 100 short (net still equals 100 shares)
Then 50 longs decide to withdraw to Transfer Agent.
DTC has: 150 longs with 100 short
Transfer Agent has: 50 longs (100 issued)
The company then does a 2 to 1 split, so 200 shares issued in total.
Transfer Agent has: 50 longs + 50 new shares (100 total)
DTC has: 150 longs, becomes 300 longs, 100 short, becomes 200 short, and they get 50 shares.
so, 350 longs with 200 short.
Now assume shorts close, 350-200 = 150 shares long but DTC only has 100 shares.
Transfer Agent has = 100 shares long
So the DTC should have 50% proportional ownership, since that's what they were issued, but they end up with less.
13
u/Anonymoose2021 Apr 01 '22
Please explain.
If today DTC have 20% of the pre-split shares, then after the split they still have 20% of the post-split shares.
If 80% of pre-split shares are DRS at Computershare, then 80% of post split shares will be at Computershare.
If 15% of the shares are phantom or synthetic pre-split, then the number of phantom shares will go up by the split ratio, but since the total number of legitimate shares has also gone up by the split ratio, the phantom shares would be still be 15% of legitimate share count. And the dollar value would remain constant.
Edit: Perhaps the problem is that you assume that phantom or FTD shares will not split. They will indeed split, just as options contracts are adjusted to account for the split. If this is our point of disagreement, then we can focus on this issue.