SEC rule on 'naked' short-selling now permanent

Discussion in 'Wall St. News' started by S2007S, Jul 27, 2009.

  1. S2007S

    S2007S

    SEC rule on 'naked' short-selling now permanent
    SEC makes emergency rule targeting 'naked' short-selling permanent

    * On Monday July 27, 2009, 2:07 pm EDT



    WASHINGTON (AP) -- Federal regulators are making permanent an emergency rule aimed at reducing abusive short-selling, put in at the height of last fall's market turmoil.

    The Securities and Exchange Commission announced Monday that it took the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday.

    Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender -- pocketing the difference in price.

    "Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime after the sale.

    The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.

    THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

    WASHINGTON (AP) -- Federal regulators are making permanent an emergency rule aimed at reducing abusive short-selling, put in at the height of last fall's market turmoil.

    The Securities and Exchange Commission announced Monday that it took the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday.

    Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender -- pocketing the difference in price.

    "Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime the sale.

    The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.
     
  2. 1) What do "permanent" and "promptly" really mean?
    2) Does the ruling apply to GS? :cool:
     
  3. How about gold.
     
  4. What a bullshit rule. Like it is supposed to fix the economy.
     
  5. This is them doing as little as they possibly can. It's being jammed down their throats. We need hard borrows. It'll all happen. The SEC will not survive this. There is enough stuff in the hopper to finish them off. And when the market sells off, they'll be under great scrutiny once again.

    Remember, this is all happening in a good tape.
     
  6. what effect will this have on the markets?
     
  7. Salmonn

    Salmonn

    up for a while and long term crash and burn

    exactly the opossite of what GOV and SEC wants

    also added volatility less predictability etc
     
  8. None.
     
  9. It'll make it less rigid and more volatile during disruptions. It'll also make U.S. exchanges less competitive.
     
  10. patchie

    patchie



    Actually, it will do nothing for the market as it only makes permanant a rule that has been in place as an interim for a year. what is quite amusing is that the "flash trading" that concerns Schumer is outside the visibility of this rule. The flash trading can use a common locate to short 10 times that locate volume and create enough havoc to cover at a profit that day while manipulating the market. This rule did not stop that event from occurring (ala DNDN and the short raid on that market earllier this year).
     
    #10     Jul 27, 2009