Short Selling Restrictions Does Not Affect Markets

Discussion in 'Trading' started by libertad, Dec 30, 2008.

  1. Euler


    Thanks for the link.

    The ban did seem to affect markets, in one way that's not discussed in that article: bid/ask spreads skyrocketed, making these securities much more expensive for liquidity takers to trade. Unable to hedge or offer to sell without stock, many participants simply refused to make markets in these securities at that point. The result: not only did these stocks continue to plunge, but it seems that they also plunged much more chaotically than they would have otherwise.
  2. And it was MS Mack...and other IB heads barking the loudest....

    Just to note these guys just blabber their books....


    And was also regretted By SEC head....

    Time for Mack, move on....

    Also lied about their effects on oil front
    of government officials....

    Time to clean out the rolodexes at the SEC.....
  3. tradersboredom

    tradersboredom Guest

    the uptick rule removal

    market makers refuse to bid if shorts keep hitting the bid on downtrend or hitting the bid on weakness.

    market makers don't have limited cash.

  4. tradersboredom

    tradersboredom Guest

    majority of short positions are professionals who work for hedge funds/brokers/market makers.

    trading against client is part of their business model.

    as for the SEC, SEC is as useless as market makers these days, have no worth in the market place.

    you can get rid of the SEC and market makers and the market will still function.

  5. Euler


    If everyone is selling, then it seems that the price should go down. As in the case of many of these financials -- the price did go down, as it should have, even with the short sale ban. And the end result was exactly what it should have been for any other bankrupt/nearly bankrupt company -- but the short sale ban seems to have made the descent more chaotic than it would have been otherwise.

    Short sale bans impede orderly markets and price discovery. I think it's abundantly clear that this one failed to accomplish anything positive.