Naked short selling finally banned while shorting still allowed

Discussion in 'Trading' started by dhpar, Oct 16, 2008.

  1. dhpar


    this crisis has at least some positive effects - i never understood why this was not implemented years ago - well HFs clearly had some power. this is great news for trading and markets in general. note that all is effective as of now...

    SEC actionThe SEC’s Been Busy – Four New Reg. SHO and Short Sale

    Amendments to Regulation SHO (Interim final temporary rule)

    SUMMARY: The Securities and Exchange Commission (“Commission”) is adopting an interim final temporary rule under the Securities Exchange Act of 1934 (“Exchange Act”) to address abusive “naked” short selling in all equity securities by requiring that participants of a clearing agency registered with the Commission deliver securities by settlement date, or if the participants have not delivered shares by settlement date, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the settlement day following the day the participant incurred the fail to deliver position. Failure to comply with the close-out requirement of the temporary rule is a violation of the temporary rule. In addition, a participant that does not comply with this close-out requirement, and any broker-dealer from which it receives trades for clearance and settlement, will not be able to short sell the security either for itself or for the account of another, unless it has previously arranged to borrow or borrowed the security, until the fail to deliver position is closed out.

    Effective Date: October 17, 2008 except §242.204T is effective October 17, 2008 until July 31, 2009

    “Naked” Short Selling Antifraud Rule (Proposed Rule)

    SUMMARY: The Securities and Exchange Commission (“Commission”) is adopting an antifraud rule under the Securities Exchange Act of 1934 (“Exchange Act”) to address fails to deliver securities that have been associated with “naked” short selling. The rule will further evidence the liability of short sellers, including broker-dealers acting for their own accounts, who deceive specified persons about their intention or ability to deliver securities in time for settlement (including persons that deceive their broker-dealer about their locate source or ownership of shares) and that fail to deliver securities by settlement date.

    Effective Date: October 17, 2008.

    17 CFR PARTS 241 AND 242 [Release No. 34-58775; File No. S7-19-07]
    Amendments to Regulation SHO (Final rule)

    SUMMARY: The Securities and Exchange Commission (“Commission”) is adopting amendments to Regulation SHO under the Securities Exchange Act of 1934 (“Exchange Act”). The amendments are intended to further reduce the number of persistent fails to deliver in certain equity securities by eliminating the options market maker exception to the close-out requirement of Regulation SHO. As a result of the amendments, fails to deliver in threshold securities that result from hedging activities by options market makers will no longer be excepted from Regulation SHO’s close-out requirement. The Commission is also providing guidance regarding bona fide market making activities for purposes of the market maker exception to Regulation SHO’s locate requirement.

    EFFECTIVE DATE: October 17, 2008.
  2. kxvid


    Still no uptick rule reinstatement. Nothing will change unless they reinstate it.
  3. Can they still naked short gold?
  4. dhpar


    by the way, would not the first paragraph suggest that we are going to have mega squeeze tomorrow in the names on short list?

    not sure i read it correctly - because that would be insane!
  5. The uptick rule is worthless with penny spreads.

    Do your homework.
  6. dhpar


    i see there already was a big short squeeze today in few names on the short list (like ABK, MBI). looking forward to tomorrow...:D

    OSTK also had a late run up on volume... haha