Shorting stock is a strategy that is vital to professional traders,arbitrage firms, hedge funds. Short stock also produces income for clearing firms. Option Market Makers would not be in business if "Short" rules were too restrictive. In reality, "Short" postions are a vital part of our countries complex financial structure. However, look for possible "Shorting" restrictions for the little guy, much like the pattern daytrader. The SEC & NASD could very easily restrict capital requirements for "Shorts" in customer accounts under $25,000 , for example , if the regulators feel "Shorts" are too risky etc. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
If there (hypothetically) were to be prohibitions on short selling they would not stop at <25K traders...the rhetoric (and fear) is based around well funded terrorist groups shorting...so the way to (hypothetically) prevent this would be to prohibit INDEPENDENT traders from short selling while leaving the industry insiders (as mentioned above by Gene) alone.
Roger, I gave $25,000 and the reason as an example. If shorting were restricted, look for greater regulatory control, restrictions for shorting in foreign accounts , customer accounts , more disclosure for corp. accounts etc. . I would agree with you that "Short" as a strategy is vital to our financial system. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net