Purely amazing. CORRECT: Britain bans short-selling of financial stocks By Steve Goldstein Last update: 1:47 p.m. EDT Sept. 18, 2008 Comments: 82 LONDON (MarketWatch) -- Britain's Financial Services Authority on Thursday banned short-selling of financial stocks and prohibited any increase in new bearish positions in the sector. Also, disclosure will be required on all positions of more than 0.25% of a stock. The regulator said it may extend the bank to other sectors. The ban is due to remain in force until Jan. 16, but it will be reviewed in 30 days. "While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector," said Hector Sants, chief executive of the FSA. End of Story
I suggested this yesterday to some friends, because the current action in financial stocks is akin to financial terrorism. The shorts are creating a self-fulfilling prophecy. I'm a free market purist...but short sellers should not be allowed to force viable companies to become bankrupt. The SEC should immediately follow the FSA's lead. and reverse the 2004 exemption that led to this excessive leverage. They should force the Ibanks to revert to pre-2004 leverage limits, at which point the ban of short sales of their stocks should be reversed.
If the shorting terrorists dump a price down so far it is undervalued, the banks should just come in and buy all the stock at such a ridiculous bargain. Oh wait...the banks don't have any money. So why don't all the smart rich people with the money come in and buy the bank stock dirt cheap thanks to the evil shorting? Cuz they are short! That leaves the government. Only they can spot a good value I guess.
It will be interesting to see if this will help or if the theoretical drop in liquidity will merely make the trading even more volatile.
where did you get they are viable? they are insolvent they lied for a year about their finances, they were provided all kind of support and still they are insolvent and bankrupt banning shorting won't prevent those companies from being bankrupts