Naked short rule to be applied across entire market

if you can't find shares or borrow shares to short, than you can't short.

the fact that SEC even allows naked shorting at all is an mystery to me.

market makers are exempt because they have to be on the bid and ask and actually 'provides a service' to market.





Quote from dubes:

I'm just a small trader with a market neutral system, and if I can't readily short shares through IB, I'm out of business.

From what I understand, the business of locating shares to borrow is extremely primitive compared to all other areas of the equity markets. The way to pre-borrow shares is to pick up the phone. Anyone with a fast trading system that spans many stocks will be severely impacted.

I don't really have a problem with the SEC rule in theory if they gave brokers a year to implement a system. The fact is that brokers are completely unprepared for the rule right now.
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Quote from piggie2000:

i have 5 accounts and several big prop house accounts and all are charging to short these 19 stocks from 1.5 cents to 6 cents per share. robbie your broker must be eating the charge. even ib who has as extensive a short list as anyone you can't short these.
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i work at a prop firm. i'll double check but i don't think we have charges like that associated with those 19. i'm pretty sure we have to pay interest (opposed to the normal collecting interest for being short) if we take them short overnight but that's all.
 
Quote from dubes:

I'm just a small trader with a market neutral system, and if I can't readily short shares through IB, I'm out of business.

From what I understand, the business of locating shares to borrow is extremely primitive compared to all other areas of the equity markets. The way to pre-borrow shares is to pick up the phone. Anyone with a fast trading system that spans many stocks will be severely impacted.

I don't really have a problem with the SEC rule in theory if they gave brokers a year to implement a system. The fact is that brokers are completely unprepared for the rule right now.
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if we don't have shares shortable we have always had to get our pit support to call to get them if we couldn't get a locate fast enough.

also you have to always be ready to adapt. rule changes are one constant thing in the market and you have to be ready to react to them.
 
Quote from jaytrader100:

you can short by selling an at the money call and buying the same strike at the money put.. this is a synthetic naked short! Use the options!
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Why both i.e. buy put AND sell call? Buying a deep ITM put would be better as far as delta is concerned (keeps most of the fluff out too). Would like to know your views.
 
more importantly.

when the dow is below 10500 and the financials are below the lows when the rules were announced/came into effect the sec is going to look rather stupid is it not.

because it has taken the view rightly or wrongly that this naked short selling/short selling is a cause of the problems with the general maret/ financials being depressed.

when this market is lower and i believe it will trader lower no one will be able to mention that naked short sellers caused the move.

in essence the SEC just shot itself in the foot.

what they gonna do then given that situation.

ban anyone from selling even if you own stock.

SEC = JOKE
 
Beaker

You're a bit harsh, the SEC are trying to prevent bear raids on vulnerable financial stocks to allow them to recapitalise.

This is better for everyone than a bailout. Things will get back to normal eventually.

Personally I don't have a probelm with NSS, but I do have a problem with FTD's, ie IMO NSS is OK if its only for a short period.

A bit like QED.
 
Quote from beginner_av:

Why both i.e. buy put AND sell call? Buying a deep ITM put would be better as far as delta is concerned (keeps most of the fluff out too). Would like to know your views.
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I don't trade them, but apparently this is the industry recognized way to create a "synthetic short" (reverse process for creating "synthetic longs').

Synthetic Shorts Primer
 
Quote from womblevader:

Beaker

You're a bit harsh, the SEC are trying to prevent bear raids on vulnerable financial stocks to allow them to recapitalise.

This is better for everyone than a bailout. Things will get back to normal eventually.

Personally I don't have a probelm with NSS, but I do have a problem with FTD's, ie IMO NSS is OK if its only for a short period.

A bit like QED.
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i disagree.

'Things will get back to normal eventually.'

i think investors in general have under estimated the scale of this.

we are one year in to this credit crunch now and things are not normal or better.

for 6 years ( 2001 2007 ) the leveraging that took place and quarter by quarter, year on year record profits by financials and related was astronomical.

this market is in the process of deleveraging.

it will effectively give back what it took out.

one year of pain was not enough.

if merrill finally conceded that the value on a known mortgage asset of $30 billion dollars was only $ 5 billion then god help the other banks.

expect more downside and more writedowns mark to market not mark to make believe.
 
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