Short Selling Ban Clarification - bloomberg

Discussion in 'Wall St. News' started by Trend Fader, Sep 18, 2008.

  1. Interesting article.
  3. dont


    Ban short selling = Zero Credibility for entire US financial system
  4. This is really a bunch of hype about nothing other than the SEC publicly threatening to enforce the current rules.

    Any short selling naked or not has no impact on day trading if you go flat every day or by T-4.

    In essence you still have the ability to write your very own personally guaranteed 3 day single stock futures contract.

    What your broker can't do is let your position run longer than three days without being squared or secured... Same rules that have been there all along but not enforced. Buy or borrow just make sure its done within 3 days and all is iwell and compliant.

    The SEC is holding your broker's feet to the fire to make sure all accounts are square and enforce these short selling rules. If your not squared up your broker will make sure your square and secure your position by t-4 market open with market orders. If your broker fails to square up all client accounts they get hammered...

    Enforcement really just impacts players that short volume unsecured and cash out when in the money. The scheme they really want to curtail is the averaging down of stock price by these impact players doubling down and selling volumes of naked shorts flooding the market driving price down for an easy exit.

    These same impact players can still naked short volumes and drive down price but are now time limited to 3 days.

    The curves for price appreciation versus depreciation greatly favors averaging down shorts over longs. Approx 1/3 of the time for price to go down as to go up.

    So whats really changed? Nothing... just enforcing the existing rules limiting short floats to 3 days.
  5. So more like a repeat of what happened in the summer? I don't like it, but it's certainly better than a market-wide ban.

    The former SEC economist quoted in the article made some good points. I'm glad there are a few voices of reason.
  6. man


    just one thing people seem to forget: prices can fall
    without people selling short. so even if there was no
    short selling at all, still the "government" does not
    make up the price. that is a little misguiding rethoric.