Discussion in 'Trading' started by bat1, May 19, 2010.
It's only fair to all players involved.
Will this help or hurt trading in the USA?
Better still, outlaw any selling.
Once you buy something it's your for good->market will never be down again, even when WW3 starts!
Agreed, let's ban selling, lets ban computers, let's ban negative speach, let's ban . . . panty hose.
I agree with the OP, theres as much a need for naked shorts as there was for the synthetic CDO market. its just a tool for the minority to exploit the majority. Its not like he said ban short selling, ban NAKED shorts there as different as night and day, if you think otherwise you're delusional.
"Naked short selling, or naked shorting, is the practice of short-selling a financial instrument without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale. When the seller does not obtain the shares within the required time frame, the result is known as a "fail to deliver". The transaction generally remains open until the shares are acquired by the seller, or the seller's broker, allowing the trade to be settled. Naked short selling can be used to fraudulently manipulate the price of securities by driving their price down, and its use in this way is illegal"
Naked shorting should be legal, not simply tacitly-so. Imagine the short-covering blowouts.
I'm of the opinion that naked short positions should be entered into in the derivative markets. For stocks and bonds, you should be required to actually borrow them.
OK, but the barrier to entry is very high. SSF are not a viable option, and equity swaps are for institutions/funds, and CFDs only trade in the EU. You can sell a CFD in Germany but you can't short the shares on the exchange even if they're borrowed?
This is a horrible idea. I like trading as much as the next guy, but if the markets are structured such that they behave in bizarre ways (witness the VW short squeeze), then the public will turn against the markets and all traders will find themselves out a job.
I think under the new German rules you can short shares if you borrow them. I think only naked shorts are the issue here. But I don't know for sure - it's not like I trade German stocks all the time.
And what's wrong with SSFs? Sure there's a substantial gap if the stock is unborrowable, but that's only sensible since you're sticking the guy on the other side of the contract with unlimited risk while you can cover your position in the stock market any time you want. Seems fair to me.
Too many stocks are unable due to arbitrary regulatory BS that has nothing to due with availability. Why allow GS to trade a riskless-reversal because they can source the short? You can't? Well too bad, this shit is on the restricted list. If you don't want shorts to hunt you down then stay private.
Ironically, we need more OTC regulation and less on the listed side. Nobody is forced to play.
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