Breaking News: SEC FINALLY Bans Naked Short Selling - Flytiger Vindicated
- Thread starter aeliodon
- Start date
What's the liquidity like trading the European markets?
Shorting has become more expensive due further regulation. Soon it will be very difficult.
Basically, any company that does not have a huge float and is actually worth shorting, will have little stock available for shorts. It was already hard to get stock years ago for many of these high flying hype Nasdaq stocks, so just imagine how much harder it will be now.
It may be a function of what/how we trade then. For me, I trade intraday and close by 4:00EST. Most of my shorts are stocks with decent float...I would say for every 10 stocks I try to short, there are only 1 or 2 at the most I can't because shares are "not borrowable".
Don't get me wrong - I think this focus on short selling in ridiculous. I like what RS said:
Rev Shark
Enough With the Short-Sellers!
9/17/2008 10:50 AM EDT
I'm so tired of the blame that short-sellers are taking for this market weakness, as if the huge debt and economic issues we are grappling with have nothing to do with why things are acting so poorly. It just strikes me as a very poor excuse made by people who are on the wrong side of this market. If I were 90% long, I'd be complaining about something, too.
Yes, short-sellers will go after vulnerable stocks, but these guys have a minuscule amount of funds compared to the long-side money. Are all the long-side buyers suddenly struck dumb and impotent by this action? Why aren't they doing battle with these shorts if they believe it's just manipulation? Shouldn't this be the buy of a lifetime if you really think it's just shorts playing games? Apparently, the big funds aren't so sure, or they would be providing support.
The market works fine. The problem is that some people have unrealistic expectations about how it should be acting.
Looks like trading futures might be the way to go afterall
They do have single stock futures..anemic voluem though
They do have single stock futures..anemic voluem though
Blankfein and Mack climbed in bed w/these guys. THis is their payback.
Do you really think this is the end of the story? When have you ever seen the SEC do anything and have it effective at 12:01??? Some of these guys you see are paid bashers. You have to use your head. We are in a global panic. WHat's the three mo bill at right now?
Naked shorting was a tool that was used to dictate will. By overwhelming markets with shear size, they crushed Bear, Leh, AIG. Like all criminals, they pushed it to the point where even the politicians had to move. But I think I said that here before.
This story is far, far from over. the next part is as serious as a heart attack.
and for the umpteenth time, I'm not Patrick Byrne.
Do you really think this is the end of the story? When have you ever seen the SEC do anything and have it effective at 12:01??? Some of these guys you see are paid bashers. You have to use your head. We are in a global panic. WHat's the three mo bill at right now?
Naked shorting was a tool that was used to dictate will. By overwhelming markets with shear size, they crushed Bear, Leh, AIG. Like all criminals, they pushed it to the point where even the politicians had to move. But I think I said that here before.
This story is far, far from over. the next part is as serious as a heart attack.
and for the umpteenth time, I'm not Patrick Byrne.
http://www.forbes.com/wallstreet/2008/09/17/sec-naked-shorts-biz-wall-cx_lm_0917naked.html
Naked Short-Selling
Fight The Shorts!
Liz Moyer, 09.17.08, 11:55 AM ET
After riding out a brutal rout in the U.S. stock market, and the significant downdrafts in shares of major financial companies in recent weeks, the Securities and Exchange Commission is stepping in to put a stop to manipulative trading.
Is this Christopher Cox's profile in courage? Not so much.
Starting Thursday, traders will have to adhere to a new set of rules aimed at eliminating naked short-selling, an abuse that can have a debilitating effect on a stock. Options-market makers will no longer enjoy the exemption they had from existing rules. All traders will have to follow stricter delivery and borrowing requirements or face penalties. Traders who deceive their brokers about whether they have followed delivery and borrowing rules could face fraud charges.
There is still room for abuse, however. Day traders still have wiggle room to naked short-sell because they can close out their trades before the three-day delivery window closes. And the SEC still hasn't revived the uptick rule.
Critics have long said the SEC fails to enforce its existing rules related to short-selling and has dragged its feet for years on tightening those rules. Still, Cox is eager to look proactive now that the financial markets are melting down, and it probably helped that prominent executives, including Lehman Brothers' (nyse: LEH - news - people ) Richard Fuld, have complained to the SEC about short-sellers.
"These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short-selling," Cox said Wednesday.
The new rules extend to all U.S. stocks, not just the 19 financial companies covered in an emergency order the SEC put in place this summer to restrict unbridled short-selling in major banks and broker dealers.
That emergency order, which hedge funds fought hard to lift, expired in August; since then, traders have hammered stocks of Lehman Brothers, Fannie Mae (nyse: FNM - news - people ), Freddie Mac (nyse: FRE - news - people ), American International Group (nyse: AIG - news - people ), Merrill Lynch (nyse: MER - news - people ) and others.
Of course, the argument in favor of the stocks' decline is that the companies were in trouble and traders were merely acting rationally.
In short-selling, a trader borrows shares and then sells them, hoping to profit by buying them at a lower price later to close out the loan. Under existing rules, traders have to confirm that the shares are at least available for a broker or dealer to borrow (the locate rule), and they are supposed to conform to the conventional three-day window to deliver shares to the trader on the other side of the transaction.
In naked short-selling, the locate rule and the delivery rule go out the window, since the trader doesn't borrow the shares to begin with. That, and the absence of a rule requiring short sales to be done on a stock's uptick, gives plenty of ammunition to a trader intent on driving a stock into the ground.
Until very recently, the whole issue was dismissed by some as the fantasy of small-company chief executives who were trying to pin the blame for their management failures on mythical market forces.
Prominent short-sellers like Kynikos Associates' James Chanos mock the claims of Overstock.com's (nasdaq: OSTK - news - people ) Patrick Bryne that naked short-selling is destroying the U.S. markets. Bryne has waged a three-year campaign to get the SEC to tighten borrowing and trade settlement rules and, perhaps more urgently, actually enforce them. Chanos, who dismisses naked short-selling as hogwash, led the fund industry's push to get the SEC to drop the restrictions this summer. He says they "will inflict substantial damage on the U.S. equity markets."
The new rules announced Wednesday will be opened for comment. In the past, the agency has been flooded with letters from ordinary investors begging it to put a stop to naked short-selling.
Still, it's a bit of vindication for Byrne, whose self-styled jihad on naked shorting has brought him no end of ridicule and the repudiation of even his own father, John J. Bryne, a close friend of Warren Buffett's who made his name and fortune in the insurance business. Jack Bryne quit as the chairman of his son's company two years ago in disagreement about Bryne's war on naked short-selling.
The elder Byrne said in an interview last month that he regrets not supporting the campaign. "I wish I would have said publicly--and to my friends, there's something to what he says, don't bet against him."
Top Story: JP Morgan Chase
Naked Short-Selling
Fight The Shorts!
Liz Moyer, 09.17.08, 11:55 AM ET
After riding out a brutal rout in the U.S. stock market, and the significant downdrafts in shares of major financial companies in recent weeks, the Securities and Exchange Commission is stepping in to put a stop to manipulative trading.
Is this Christopher Cox's profile in courage? Not so much.
Starting Thursday, traders will have to adhere to a new set of rules aimed at eliminating naked short-selling, an abuse that can have a debilitating effect on a stock. Options-market makers will no longer enjoy the exemption they had from existing rules. All traders will have to follow stricter delivery and borrowing requirements or face penalties. Traders who deceive their brokers about whether they have followed delivery and borrowing rules could face fraud charges.
There is still room for abuse, however. Day traders still have wiggle room to naked short-sell because they can close out their trades before the three-day delivery window closes. And the SEC still hasn't revived the uptick rule.
Critics have long said the SEC fails to enforce its existing rules related to short-selling and has dragged its feet for years on tightening those rules. Still, Cox is eager to look proactive now that the financial markets are melting down, and it probably helped that prominent executives, including Lehman Brothers' (nyse: LEH - news - people ) Richard Fuld, have complained to the SEC about short-sellers.
"These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short-selling," Cox said Wednesday.
The new rules extend to all U.S. stocks, not just the 19 financial companies covered in an emergency order the SEC put in place this summer to restrict unbridled short-selling in major banks and broker dealers.
That emergency order, which hedge funds fought hard to lift, expired in August; since then, traders have hammered stocks of Lehman Brothers, Fannie Mae (nyse: FNM - news - people ), Freddie Mac (nyse: FRE - news - people ), American International Group (nyse: AIG - news - people ), Merrill Lynch (nyse: MER - news - people ) and others.
Of course, the argument in favor of the stocks' decline is that the companies were in trouble and traders were merely acting rationally.
In short-selling, a trader borrows shares and then sells them, hoping to profit by buying them at a lower price later to close out the loan. Under existing rules, traders have to confirm that the shares are at least available for a broker or dealer to borrow (the locate rule), and they are supposed to conform to the conventional three-day window to deliver shares to the trader on the other side of the transaction.
In naked short-selling, the locate rule and the delivery rule go out the window, since the trader doesn't borrow the shares to begin with. That, and the absence of a rule requiring short sales to be done on a stock's uptick, gives plenty of ammunition to a trader intent on driving a stock into the ground.
Until very recently, the whole issue was dismissed by some as the fantasy of small-company chief executives who were trying to pin the blame for their management failures on mythical market forces.
Prominent short-sellers like Kynikos Associates' James Chanos mock the claims of Overstock.com's (nasdaq: OSTK - news - people ) Patrick Bryne that naked short-selling is destroying the U.S. markets. Bryne has waged a three-year campaign to get the SEC to tighten borrowing and trade settlement rules and, perhaps more urgently, actually enforce them. Chanos, who dismisses naked short-selling as hogwash, led the fund industry's push to get the SEC to drop the restrictions this summer. He says they "will inflict substantial damage on the U.S. equity markets."
The new rules announced Wednesday will be opened for comment. In the past, the agency has been flooded with letters from ordinary investors begging it to put a stop to naked short-selling.
Still, it's a bit of vindication for Byrne, whose self-styled jihad on naked shorting has brought him no end of ridicule and the repudiation of even his own father, John J. Bryne, a close friend of Warren Buffett's who made his name and fortune in the insurance business. Jack Bryne quit as the chairman of his son's company two years ago in disagreement about Bryne's war on naked short-selling.
The elder Byrne said in an interview last month that he regrets not supporting the campaign. "I wish I would have said publicly--and to my friends, there's something to what he says, don't bet against him."
Top Story: JP Morgan Chase
LOL what? Are you retarded?
SEC gave Mack and his firm the right to naked short freely.
Get back on ur meds, please.
leh, bear, aig all died not from naked shorting but from holding too much toxic paper while being over levered for too long hoping this crisis would blow over. Naked shorting doesn't kill companies, shitty management and business models do.