If you are allowed to sell something you don't own ONCE, whats to stop you from selling it two or more times ? Surely thats where the real money is to be made.....
I like your theory about why the market was rising on the last two afternoons. It certainly was an unusual formation to the index parttern during the day. The problem with your theory is, if hedge funds were buying to unwind shortsales and return borrowed shares to Opes, then you would only notice if they were high index weight large cap stocks. But ( and when I read this I was surprised ), the Opes portfolios were largely weighted into speccy miners and not into bluechips.
Now its possible, that hedge funds shorting large cap stocks using stock borrowed from Opes, were sourcing those large cap stocks from super fund custodians through Opes rather than from the portfolios of Opes' margin lending clients. That would make your theory work.
