You know, I've run into a lot of guys like you at a lot of big firms over the last eight years or so. "we're too big to fail' or "fuck you. get a lawyer." About now, when they speak to me, they hang they're heads. They're scared shitless. Oh well. Sun don't shine on the same dogs ass everyday.
without market maker 'participation' and providing the liquidity and capital for you traders and speculators to play around with ,,the market would have no volume days and can't make money on momentum and theoretically the market would decline or crash to much much lower levels. market makers must have a bid and ask to get these privilleges and margin 'privilleges'.
the market makers make their money from large institutional clients not from small time retail traders.
http://www.foxbusiness.com/video/index.html Over the weekend, I alluded to what I knew, and you didnt'. Listen to the reference to the NYSE and Monday opening.
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Financials up huge today. Underwriting picking up, is it??? Auction rate securities on the rebound? Maybe IPO's coming? Good to see the industry turn around. Eight guys buggerin' each other in the ass, and the SEC is passing out rubbers.
Very informative thread. I want to recieve new posts for this thread in my mail, but I have no comment. This is the big boys talk , over my head to give any good feedback, but love to listen, so thats why I post now.
The problem is not the naked shorts, the problem is the FTD's. By enforcing the locate on these securities, the SEC is giving the prime brokers a chance to make huge money charging ridiculous amounts for the shares they allocate. While not dealing with the actual problem... FTD's. In Euronext and LSE, no one has to pre-borrow the stock in order to short it [so technically everyone is a naked short seller] but they enforce delivery and they consider FTD's to be a serious offense. The SEC on the other hand, is soft on FTD's and now wants to play hard with stock locates... If they want to fix the problem they could start by enforcing delivery... but then again... by doing that they might piss-off a few of their good friends. The whole idea of changing the rules whenever things are not going the right way [aka... stocks going up and commodities going down] is a dangerous way to set the rules... more often than not it blows up on your face.
Mother of All Short Squeezes? by: Matt Blackman posted on: July 20, 2008 Tuesdayâs action by the SEC in amending Regulation Short Sales (RegSHO) listed 19 banks and financial companies for which naked shorting was effectively banned for 30 days. Such a limit was long overdue but why limit the restriction to just 19 companies and just 30 days? Naked short selling (selling shares short that are not first borrowed, which is required to execute a legal short) is endemic and the SEC has turned a blind eye to it since the agency was created. This recent action is a knee-jerk reaction but a clear example of too little way too late. The question is will they have the stomach to do what it necessary and give all stocks the same naked short protection? But like anything else, the devil is in the detail. As you can see from the chart below, the ban and rally created one mother of a short squeeze this week with the 17 companies trading on the NYSE rallying nearly 20% in just three days. However, since May 1, 2008 this group is still down 24.8%. (Before this past weekâs rocket ride, the group was down 37.2%.) Not surprisingly given the government bailout plan announced this week, Fannie Mae (FNM) and Freddie Mac (FRE) enjoyed the biggest lift jumping 89.5% and 74.5% between July 15 and July 18. But as of the July 18 close, they were still down 61% and 72% in the last four months (since March 20). In their monthly Short Interest Report on July 16, Bespoke Investment Group updated their short interest numbers showing that short interest as a percentage of the float continued to increase during the second half of June with the average short interest hitting 6% for the S&P 500. Over the last year, short interest has increased 48% for the 500 stocks. Bespoke also found that the 10 percent of stocks in the S&P 1500 with the highest short interest (150 stocks) gained 15.1% in the two day period ending July 17, 2008 compared to just 2.2% for the 150 stocks with the lowest short interest. Now thatâs a short squeeze rally! Figure 2 â Chart showing three-day stock performance for 17 of the 19 stocks that the SEC identified in its naked-short prohibition order amendment to the Regulation Short Sale (RegSHO) rules Tuesday. Two of the companies trade on the pink sheets so we graphed the other 17 that trade on the NYSE. As a group, these stocks jumped nearly 20% in the recent three-day period! Chart by VectorVest.com. We checked Buyins.net, a website that tracks naked short selling statistics that became available as the result of RegSHO that became law on January 1, 2005. Buyins.net has to contend with a regular barrage of hack attacks presumably from short sellers who donât like what they are doing. We looked at their list of stocks that are fail to delivers [FTDs] (stocks shorted without first having to borrow the same number of shares, which is what you and I have to do before executing a short sale). At the top of the list is Medis Technologies (MDTL), which has remained on the SECâs fail to deliver threshold list for 742 days. In other words, it has been the target of naked short attacks and these shorts have not had to deliver shares that they have shorted for a total of 742 days! We counted a total of 244 stocks that have stocks that are classified as fail to delivers in excess of the maximum supposedly allowed by the SEC of 13 days. Brokers, market makers and some other big players have found ways around this inconvenient rule. Brokers and money-makers should have some time to deliver borrows, but 742 days?! There is something seriously wrong in stock regulation/enforcement land and as long as it is allowed to continue, stock markets will experience increased short-driven volatility.