Naked short rule to be applied across entire market

Discussion in 'Wall St. News' started by ChkitOut, Jul 28, 2008.

  1. Look more and more like this will happen very soon.

    SEC Chairman Christopher Cox told Congress last week that a proposal expanding the order to cover all public companies will be introduced soon. An agency spokesman declined to comment Monday.

    In all seriousness how will this change the face of trading. I'm hearing its extremely difficult to short financials, will this be the case across all equities?

    How can you possibly trade stocks like this? Most successful equity traders are market neutral, how the hell are you supposed to operate your business if you cant short anything.

    What happens when the hedge funds pay up and hog up all available shares available to borrow. Small traders will be left with no ability to short.

    Maybe I'm over reaching here.

  2. have you had trouble shorting those 19 stocks? we have usually been able to get them.
  3. I don't understand why this bothers you. When's the last time you were able to short naked. This rule basically only applies to hedge funds. I have never in my trading career naked shorted. I always have to secure the shares first. This is finally a good progression by the SEC. They're enforcing a rule they have had for ages. my opinion.
  4. contrary


    FNM shares are drying up. Saw some posts on other boards saying that some brokers don't have any shares of FNM available to short. I shorted FNM today, but my broker took a long time to execute the order. Whenever it takes them that long, it means they are having difficulty locating shares.
  5. I wouldn't be short those babies. Paulson just got his "bazooka" approved this weekend. Watch him start playing with it Via Goldman Sachs in the coming days.
  6. i have 5 accounts and several big prop house accounts and all are charging to short these 19 stocks from 1.5 cents to 6 cents per share. robbie your broker must be eating the charge. even ib who has as extensive a short list as anyone you can't short these.
  7. What happens when the hedge funds pay up and hog up all available shares available to borrow. Small traders will be left with no ability to short.

    Question. Suppose the hedge funds pay up and hog all the shares. Assume the hedge funds don't use nor need these "borrowed" shares but now they are in their inventory, what's to prevent them from lending them out to other hedge fund for another round of fees?

    Possibly the broker is now out of the lending business (no stock to lend) and put the hedge funds in the business of re-lending. These could end up off market transactions and create another layer of UNaccountability.
  8. Naked shorting theoretically is not possible.

    How can you sell something you don't have so it makes the market look stupid or like scam. you are selling a IOU

    if these shorts want to bet they can short single stock futures, but not the stock itself. stocks can be easily manipulated in naked shorting and pumping for hedge funds with hundreds of millions of dollars at their disposal

  9. dubes


    I'm just a small trader with a market neutral system, and if I can't readily short shares through IB, I'm out of business.

    From what I understand, the business of locating shares to borrow is extremely primitive compared to all other areas of the equity markets. The way to pre-borrow shares is to pick up the phone. Anyone with a fast trading system that spans many stocks will be severely impacted.

    I don't really have a problem with the SEC rule in theory if they gave brokers a year to implement a system. The fact is that brokers are completely unprepared for the rule right now.
    #10     Jul 28, 2008