SEC already reverses short sell BAN

Discussion in 'Trading' started by NY_HOOD, Sep 23, 2008.

  1. SEC quickly revises short-selling rules - WSJ

    WSJ reports the SEC said shortly after midnight Monday that it would revise rules to curb short selling that it had issued just three days before. The SEC's latest change of direction on short selling caught some market participants off guard and prompted criticism that the agency has miscalculated the impact of its rulemaking. The SEC, in a release issued at 12:26 a.m. EST Monday, reversed a position it had taken Friday when it said that market makers couldn't short financial stocks after Friday. The new rules as of Monday: Those engaged in bona fide market making and hedging activity, including in derivative contracts, could continue to short. "The purpose of this accommodation is to permit market makers to continue to provide liquidity to the markets," the SEC explained in the revised order. To try to prevent short sellers from using market makers to take big positions, the SEC said market makers couldn't short for a customer if it would give them a net short position in the security.
  2. Daal


    what a measleading title
  3. Heh. So daytraders can't short but market makers can. What if you trade a market making strategy as a daytrader? DOESN'T FUCKING MATTER. The big boys can have - legally - the easy free money from being able to short, we the public - whom they're uh, supposedly trying to protect - can't. Why am I not surprised.

    NY_HOOD, very very misleading title, you got my hopes up only to have me feeling more let down. :(
  4. mxjones


    Seriously, WTF? A moderator needs to change that.
  5. I apologize guys, the title is mis leading. should have been more responsible with that one. sorry.
  6. nitro


    The difference is you are not legally bound to make markets, whereas MMs are. You can pull your quotes indefinetly.

  7. please stop using facts. we need to keep this thread in the true spirit of elite trader. misleading thread titles and conspiracy theories only please.
  8. That's great Nitro, except you never see the fucking MM's around anymore. Everything is an ECN. Those guys only seem to come out of their holes once in a blue moon. Further to that, my guess is that these guys are constantly running away from this inside, despite their 'legal obligation'.

    Oh yeah, and there is that small change recently made by the NYSE permitting the Specialist to take a more proprietary stance in his trading. He no longer has the obligations to the 'retail' client order flow.
  9. nitro


    I am not sure about what used to be the "specialists" on the NYSE. I don't believe they are bound by having to make markets anymore, so I have to be careful and may have to ceed on that point.

    However, [equity] option MMs do have to make markets, albeit they can be wide. We must be able to hedge.

    I have always believed that excess regulation shows that we have not been creative enough. What people should be thinking is, let's invent a way where the market takes care of itself. What I mean by that is, figure out some exchange traded contract that would structurally prevent manipulative short selling. That is, it would create an arbitrage in the face of manipulative short selling.

    I know I am dreaming, but if some financial genius could invent such a contract, (s)he would win the Nobel Prize in Economics.

    Here is a simple example [not arb per se]. Provide an asymetric liquidity payment for improving the NBBO on the bid or market taking on the offer, and charge for improving the NBBO on the ask and market taking the bid, or some variant thereof. That may slow down short sellers. And no need for uptick rule.

  10. Very true, pull up the box for 90% of Nasdaq stocks and you'll almost always see guys quoting .01-1000 100 up.

    A blanket exemption without strict compliance to prevent proprietary naked short sell abuse is of course bullshit, and lets anyone with a B-D license and wide quote short at will masquerading as a market maker.
    #10     Sep 23, 2008