The claims against DTCC have to do with its role in the trade settlement process.
Meanwhile, this year, Peru became the first Latin American country to open a yuan-denominated trade settlement account.
The yuan will play a more important role in global trade settlement in the next few years.
On Aug. 17, Pegasus also joined a list of Nasdaq stocks that have the most trade settlement failures.
However, the yuan is already emerging as a trade settlement currency in North Asia and South East Asia.
That leads to trade settlement failures and puts downward pressure on a stock.
Trade settlement failures can be an indication that a manipulative form of short-selling--called naked short-selling--is going on with the stock.
One indication that naked short positions exist is the number of trade settlement failures that exist for a particular stock.
The growth of offshore yuan-denominated bonds, offshore yuan deposits and trade settlement were the main drivers to the rising index, said the bank.
The fake transactions probably go back to 2010 because importers and exporters began to use the renminbi for trade settlement purposes in 2009.
FORBES: China's Recent Trade Statistics Have Been Artificially Inflated
He also rejected the banks' arguments that trade settlement failures do not create phantom shares, a central claim of the anti-naked short selling camp.
Byrne has waged a three-year campaign to get the SEC to tighten borrowing and trade settlement rules and, perhaps more urgently, actually enforce them.
But in his comment letter, dated Sept. 8, the governor urged amendments to Reg SHO, including shorter trade settlement deadlines and daily disclosure of trade failures.
Utah's state legislature went so far as to pass a law that would impose stiff penalties on brokers that didn't promptly report trade settlement failures to the state's securities division.
The inquiry was sparked when yuan remitted into Hong Kong for trade settlement in October more than doubled from the previous month, boosting yuan on deposit in the city's banks by 45%.
WSJ: The View From Hong Kong: Walking a Fine Line on Yuan Trade
Companies like Global Links have claimed that the high degree of trade settlement failures have caused irreparable damage not only to their stocks but also to their ability to carry on as companies.
Overstock.com's Chief Executive Patrick Byrne has been campaigning for two years to put a stop to deliberate naked short selling, not just in his own company's stock, and to clean up the trade settlement process.
Trading in Bear shares was so frantic that many didn't settle properly, and so Bear Stearns starting showing up on the New York Stock Exchange's daily list of stocks with high incidences of persistent trade settlement failures.
Both the SEC and the exchanges use the data to determine whether a stock has high enough and persistent enough trade settlement failures to warrant including it on a list of similar securities for which special trading restrictions are supposed to kick in.
New data from the U.S. Securities and Exchange Commission reveals trade settlement fails in early February 2005 that were 27 times greater than the total number of shares Global Links (other-otc: GLLC - news - people ) had issued at the time.
Data obtained under a Freedom of Information Act request by David Patch, a well-known blogger in the movement to eradicate manipulative naked short-selling, showed an astonishingly high degree of trade settlement failures in Global Links shares in the days and weeks following a 350-to-1 reverse split in February 2005.
Activists are lobbying for new regulations, beyond a Federal Trade Commission settlement last year that calls for the government to audit Facebook's privacy policies for 20 years.
The U.S. Federal Trade Commission's settlement with a major credit bureau that hit consumers with charges after promising a free credit report is a victory for all those who don't read the small print.
Although some U.S. complaints about Chinese trade and economic policies are legitimate and probably worth deploying the resources to resolve (including through dispute settlement in the World Trade Organization), other complaints are bogus because there is no violation of an agreement or because the United States is guilty of the same infractions.
As the Justice Department's settlement administrator begins to track down victims, the recent experience of the Federal Trade Commission, which inked its own settlement with Countrywide last year, offers a possible road map.
"Facebook's proposed changes implicate the user privacy and the terms of a recent settlement with the Federal Trade Commission, " the letter said.
The company in November agreed to a 20-year settlement with the Federal Trade Commission over accusations that it misled users about its use of their personal information.
About 450, 000 homeowners who were overcharged by Countrywide Home Loans will receive checks in the mail from the Federal Trade Commission as part of its settlement with the lender.
FORBES: 450,000 Countrywide Victims To Receive $108 Million For Excessive Fees
Despite a settlement last year with the Federal Trade Commission in which the company agreed to independent privacy audits for 20 years, privacy advocates worry about the vast trove of user data it owns.
He argues that China's inclusion in the WTO, and hence permanent normal trade relations with the U.S., is good for both sides because trade disputes can be resolved through an impartial dispute settlement mechanism.
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