Naked short sell FNM and FRE: help ???

Discussion in 'Trading' started by Digs, Jul 17, 2008.

  1. Digs


    Ok sorry for being a bit slow.

    1) Is naked short selling just going sell on my terminal on the stock?

    2) Is it true i cant short FNM and FRE ?

    3) What about other banks and investment banks, can I short them?
  2. 1) Please re-translate the question.
    2) Yes, it's true, you can't short-sell FNM and FRE. To do so would be unpatriotic.
    3) You can't short-sell other banks. To do so would be un-American.
    4) You're too slow to identify the opportunity to short-sell those issues. Consider buying them instead.
  3. Digs


    Nazz I am not american, and I shorted them ages ago, just wanted to know what rules have changed.

    you didnt need to be such a dick !
  4. Digs


    The Securities and Exchange Commission has issued an emergency order that it says is designed to enhance investor protections against so-called 'naked' short selling in the securities of mortgage giants Fannie Mae and Freddie Mac and in a list of primary dealers at commercial and investment banks.

    The SEC's emergency order, which will take effect from Monday, July 21 and initially will be valid for nine days, will require that anyone carrying out a short sale in the designated securities must arrange to borrow the securities beforehand and deliver them at settlement. In addition, the SEC says it will set out new rules to address the issue of naked shorting across the entire market.

    'The SEC's mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been,' says chairman Christopher Cox.

    'Today's action aims to stop unlawful manipulation through naked short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close co-operation with our regulatory counterparts to promote the continued health and vibrancy of our markets.'

    The emergency order, made under the SEC's authority under Section 12(k)(2) of the Securities Exchange Act of 1934, will take effect at 12.01 a.m. ET on July 21 and expire at 11.59 p.m. on July 29.

    The commission may extend the order to continue it in effect if it decides that this is necessary in the public interest and for the protection of investors, for up to a maximum of 30 days.

    The firms designated in the order that will benefit from the ban on naked shorting are BNP Paribas Securities, Bank of America, Barclays, Citigroup, Credit Suisse, Daiwa Securities, Deutsche Bank, Allianz, Goldman Sachs, Royal Bank of Scotland, HSBC, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Mizuho Financial, Morgan Stanley and UBS, as well as Freddie Mac and Fannie Mae.

    Meanwhile, the SEC is reported to have issued subpoenas to more than 50 hedge fund managers as part of an investigation into allegations that market participants have spread false rumours in order to depress the share prices of certain financial institutions artificially.

    The subpoenas are said by the Wall Street Journal to relate specifically to Bear Stearns and Lehman Brothers. Following a collapse of confidence in Bear Stearns in March, the venerable New York investment bank was forced to sell itself hastily and cheaply to JP Morgan.

    The newspaper says Citadel Investment Group and SAC Capital Advisors are among the managers to have received subpoenas, which reportedly relate to trading in the stocks of the two institutions and well as communications with other market participants. However, the managers concerned are not necessarily under suspicion of market manipulation.
  5. Most brokers won't allow you to naked short, the system flags it before it goes through. . If you're trading prop, maybe your system would allow it to go through. You can get a huge fine for naked shorting.

    I just got off a conference call with Goldman Sachs. Here is the list of non-shortable stocks, without a "pre-borrow" which is a lot different than a "Locate."

    If things change, I'll post an update.

    The securities identified in the Commission's order:

    Company Ticker Symbol(s)
    BNP Paribas Securities Corp. BNPQF or BNPQY
    Bank of America Corporation BAC
    Barclays PLC BCS
    Citigroup Inc. C
    Credit Suisse Group CS

    Daiwa Securities Group Inc. DSECY
    Deutsche Bank Group AG DB
    Allianz SE AZ
    Goldman, Sachs Group Inc GS
    Royal Bank ADS RBS
    HSBC Holdings PLC ADS HBC and HSI
    J. P. Morgan Chase & Co. JPM
    Lehman Brothers Holdings Inc. LEH
    Merrill Lynch & Co., Inc. MER
    Mizuho Financial Group, Inc. MFG
    Morgan Stanley MS
    Freddie Mac FRE
    Fannie Mae FNM

  7. If you're broker can ensure that the shares can be borrowed, you'll be able to short sell. I'm with IB and haven't seen any communication from them about this yet. But they have a real time system to ensure they have the shares available so I'm not anticipating any change.
  8. mr19


    You might want to double check that with IB tomorrow. I had locates on both FRE & FNM today and GS started rejecting my orders mid-day with "Security not available to borrow" messages. Doubt this only applies to GS.

    The others on Don's list were ok with just a locate, but I'm guessing that will change as well come Monday.

    (I'll be in on the conference call tomorrow with GS and hopefully get more clarification).
  9. This whole thing is total BS. I mean as long as you settle things are okay. This is just more intervention into a freemarket economy. The same crap that got us here in the first place "Govt intervention".
  10. I think his first question is if it is considered naked shorting if you have say IB up and hit sell?
    #10     Jul 17, 2008