SEC Bans Shorting of Financials

Whoever said China, the largest communist country in the world, has a free-er market than the US was dead on. The last time the NYSE banned short-selling, they had to repeal it two days after because it was artificially raising prices (no fucking way!).

What next? Reinstate the uptick rule?

Better yet, why not just follow Pakistan's lead in forbidding the market to drop?
http://www.cnbc.com/id/26439444

For SEC announcement:
http://sec.gov/news/press/2008/2008-211.htm

Comments (7)

Sep 19, 2008 - 12:55pm
Eddie Braverman, what's your opinion? Comment below:

they could call for a mandatory covering of all current short positions in the financials. That would force the market much higher and serve the political purposes of this sham. We're really only one step away from forced buying, anyway.

Best Response
Sep 19, 2008 - 1:20pm
wintonheights, what's your opinion? Comment below:

is that its only temporary....which then leaves me somewhat divided on the issue.

on the one hand, preventing shorts (probably orchestrated by GS and MS bitch assed lobbying) is principally such a violation of market dynamics its unsettling (it was fine for previous sessions, but not now? shorting isnt the problem. its the lack of transparency in these institutions. why dont regulators burn the candle all night to fix that?)

...on the other hand tho, aggressive shorting could have continually made flammable the already scorched financial sector...tho i would have liked some explicit proof that this was the case with the announcement (i mean, wheres the accountability?). actually, ive change my mind. im not divided. since when do stock prices CHANGE company fundamentals? BS. this whole moratorium reeks.

one thing is clear tho, regulators have heavy and difficult decisions to make. i respect that.

  • 2
Sep 19, 2008 - 1:28pm
mwgr5, what's your opinion? Comment below:

I think this new SEC rule is outrageous. Whenever there is a market panic, people blame the evil short sellers. In reality short sellers enable faster price discovery. Companies with strong fundamentals cannot be ruined by excessive short selling. Also, this rule is just a temporary more. When the SEC implemented the short selling rule over the summer financials rallied, only to eventually collapse months later after the emergency order ended.

www.sharpeinvesting.com

Sep 19, 2008 - 1:37pm
MMBinNC, what's your opinion? Comment below:

Thank you- someone agrees with me! You should be able to play both sides of the market- not simply long- that enable price inflation beyond it true value. People seem to blame the "short sellers" and "hedge fund managers" while its simply bad ideas (who the hell thought selling a $1,000,000 to someone who makes 60k a year is a good idea?). Lew Ranieri said that the federal regulations of the subprime market and bankruptcy laws are what caused subprime- so now we need more regulations!!!!? Come on.

So what do you do? -I work for an investment banking firm. Oh okay; you are like my brother, he works for Edward Jones. -No, a college degree is required in my profession

Reality hits you hard, bro...
  • 1
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Sep 19, 2008 - 2:50pm
trade4size, what's your opinion? Comment below:

This new rule is absolutely assanine. Im sitting here watching my screen saying "so this is what happens where there are no short..." ooooh ahhh eeeee. This is going to put a temporary cramp on some of my friends that are prop traders that have made a retarded amount of money during this crisis.

It will allow for a more solid solution to be drafted over the next couple days and help prevent an all out fallout. Who would have thought that GS would have traded down to an 85 handle? Who would have thought MS trades all the way down to an 11 handle? If someone would have told me this last week I would have laughed right in there face but this is the type market we are in. I think its a shorht term fix to a long term problem. I hope this was done because it was absolutely positively necessary with no other choice.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
  • 2
Sep 19, 2008 - 4:32pm
carfield, what's your opinion? Comment below:

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