They're really fucking with the market at the expense of the bears and here's why. We all know that "phantom" shares are created out of thin air when naked shorts are in play. But let's get real for once. Aren't phantom shares created equally out of thin air when the Dow rallies more than 400 points? So if you plan to bitch, at least do it in a manner that's consistent and fair to everyone.
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Naked short rule to be applied across entire market
- Thread starter ChkitOut
- Start date
As I wrote above, the same scenario more often than not applies otherway around as well. When the stock rallies, there has to be those who sell short in addition to those who are liquidating their position. By your analogy, most of these sell short orders would be catagorized as butt-naked. But why the fuck are they not bitching about it?!Quote from bbqbbq:
Take the following example: A small investor buys 100 shares at a broker. The broker lends 100 shares to a hedge fund who uses it to short. The 100 shares go back on the market because of that. By a fluke, the same small investor buys those same 100 shares. He now has 200 shares which is actually double the 100 shares he used to have. The hedge fund shorts again 100 shares. Because the broker doesnt recognize the 100 shares as shorted shares, the broker uses 100 of 200 shares to lend to the hedge fund. But this is the same 100 shares that were originally used.
Quote from saliva:
They're really fucking with the market at the expense of the bears and here's why. We all know that "phantom" shares are created out of thin air when naked shorts are in play. But let's get real for once. Aren't phantom shares created equally out of thin air when the Dow rallies more than 400 points? So if you plan to bitch, at least do it in a manner that's consistent and fair to everyone.
maybe i got lost somewhere, but both scenarios are bad for the longs. in the rally case, if shares are created out of thin air, then there's more supply hindering a rally that might have gone to 500, 600 or more.
do you mean shares are destroyed/hidden during a rally?
Quote from saliva:
They're really fucking with the market at the expense of the bears and here's why. We all know that "phantom" shares are created out of thin air when naked shorts are in play. But let's get real for once. Aren't phantom shares created equally out of thin air when the Dow rallies more than 400 points? So if you plan to bitch, at least do it in a manner that's consistent and fair to everyone.
That's because it was the manipulators who appear to side with legit bears that brought on the crisis. So, where did you think the ax would fall? On all bears neck. And it's going to end up costing me money too. Here's what happens.
Hedgefund A gets a locate for 100,000 shares. He uses that locate at 5 brokers to short 500,000 shares. If the auditors come in, they go to Broker A, they see a locate. Another auitor goes to Broker B, sees a legit locate, but it's the same one. They don't compare notes. HF A sells short 500,000 shares. Another thng is daytrading. You can naked short all day long and if you cover w/i 3 days, no fail.
So, what we are going to see is pre borrows for all shorts. That cost us all money. But there is no self control from the industry, so this is the future. So, on my platform, when it's 'available', and I can just short, it'll be "it's .005/share, do you want it?" Sell it or not, I pay, and then they'll be a five to ten cent uptick rule. That's where they are headed.
Quote from flytiger:
That's because it was the manipulators who appear to side with legit bears that brought on the crisis. So, where did you think the ax would fall? On all bears neck. And it's going to end up costing me money too. Here's what happens.
Hedgefund A gets a locate for 100,000 shares. He uses that locate at 5 brokers to short 500,000 shares. If the auditors come in, they go to Broker A, they see a locate. Another auitor goes to Broker B, sees a legit locate, but it's the same one. They don't compare notes. HF A sells short 500,000 shares. Another thng is daytrading. You can naked short all day long and if you cover w/i 3 days, no fail.
So, what we are going to see is pre borrows for all shorts. That cost us all money. But there is no self control from the industry, so this is the future. So, on my platform, when it's 'available', and I can just short, it'll be "it's .005/share, do you want it?" Sell it or not, I pay, and then they'll be a five to ten cent uptick rule. That's where they are headed.
I realize I don't know anything, however:
""Before we can make a trade that involves short stock in those affected names, we have to verify that the customer has pre-borrowed the stock and then get confirmation from the firm that lent the stock. This slows us down and eats up quite a bit of manpower that can be better used elsewhere," Greenberg said."
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0927274020080810
Not a bad guess for a Know nothing. There is a big clue in here on what happens next week. You've got a spineless regulatory body, and a Street that'll eat its young. Figure it out. And here, you've got some moron saying obeying the law eats up manpower that could be used somewhere else. Like, stealing candy from children??
COMPANIES
Financial servicesCloseâNakedâ short-selling rule set to expire
By Joanna Chung in New York
Published: August 10 2008 18:34 | Last updated: August 10 2008 18:34
An emergency measure protecting a select group of financial stocks from abusive short-selling expires on Tuesday, probably leaving at least a two-month gap before a similar rule, currently being considered, is imposed.
The US Securities and Exchange Commission has said that it would not extend the rule preventing ânakedâ short-selling in shares of 19 key financial entities, including mortgage groups Fannie Mae and Freddie Mac, and big Wall Street firms that include investment bank Lehman Brothers.
Instead, its staff is drawing up new proposals to guard against abusive short-selling in shares across the entire market.
However, it is likely to be a couple of weeks before they are proposed, followed by a public comment period of at least 30 days. Several ideas are being studied, including the requirement that is at the heart of the emergency rule.
Short-sellers aim to profit from share declines, usually by borrowing a stock, selling it and buying it back after its price has decreased. In ânakedâ short-selling, the shares are sold without being borrowed first. The emergency rule requires investors to borrow the security first and deliver at settlement.
The rule slowed down trading, some market participants said, because most traders had to make pre-borrow arrangements manually for the 19 shares. But any new pre-borrow requirement rule, which would involve collecting public comment, is unlikely to be imposed for at least two months, according to SEC officials.
Other ideas, however, could be adopted earlier â at the time proposals are issued â including a requirement to disclose substantial short positions or to use a price test or some kind of âcircuit breakerâ to limit short-selling when, for instance, shares fall by a certain percentage.
âGiven the great differences between all of the companies across the market, a one-size-fits-all approach is unlikely,â one SEC official said.
Nevertheless, market participants say traders might not engage in ânakedâ short-selling in the intervening weeks.
âA message has been sent and I donât think weâll see a return to that,â said one, while another said the emergency measure gave the market a necessary breather. Others say traders can short-sell legitimately through numerous other methods, including using derivatives.
However, some market participants are uneasy. âWe remain concerned that during this interim time period our members will continue to be exposed to these âdistort and shortâ campaigns,â said Sarah Miller, senior vice-president of the American Bankers Association.
Ms Miller wants the SEC either to extend the emergency order and include all banks or to issue a proposal as soon as possible.
She said the growing volume of âfailures-to-deliverâ are indicative of abusive short-selling, and that a spike in FTDs is invariably accompanied by significant stock drops, not all of which can be attributable to market or bank-specific conditions. âWe suspect that the volume of FTDs has only continued to grow, perhaps dramatically,â she said.
SEC officials, who are also working on amending some existing rules governing short-selling, are still studying the impact of the emergency rule.
Copyright The Financial Times Limited 2008
Financial servicesCloseâNakedâ short-selling rule set to expire
By Joanna Chung in New York
Published: August 10 2008 18:34 | Last updated: August 10 2008 18:34
An emergency measure protecting a select group of financial stocks from abusive short-selling expires on Tuesday, probably leaving at least a two-month gap before a similar rule, currently being considered, is imposed.
The US Securities and Exchange Commission has said that it would not extend the rule preventing ânakedâ short-selling in shares of 19 key financial entities, including mortgage groups Fannie Mae and Freddie Mac, and big Wall Street firms that include investment bank Lehman Brothers.
Instead, its staff is drawing up new proposals to guard against abusive short-selling in shares across the entire market.
However, it is likely to be a couple of weeks before they are proposed, followed by a public comment period of at least 30 days. Several ideas are being studied, including the requirement that is at the heart of the emergency rule.
Short-sellers aim to profit from share declines, usually by borrowing a stock, selling it and buying it back after its price has decreased. In ânakedâ short-selling, the shares are sold without being borrowed first. The emergency rule requires investors to borrow the security first and deliver at settlement.
The rule slowed down trading, some market participants said, because most traders had to make pre-borrow arrangements manually for the 19 shares. But any new pre-borrow requirement rule, which would involve collecting public comment, is unlikely to be imposed for at least two months, according to SEC officials.
Other ideas, however, could be adopted earlier â at the time proposals are issued â including a requirement to disclose substantial short positions or to use a price test or some kind of âcircuit breakerâ to limit short-selling when, for instance, shares fall by a certain percentage.
âGiven the great differences between all of the companies across the market, a one-size-fits-all approach is unlikely,â one SEC official said.
Nevertheless, market participants say traders might not engage in ânakedâ short-selling in the intervening weeks.
âA message has been sent and I donât think weâll see a return to that,â said one, while another said the emergency measure gave the market a necessary breather. Others say traders can short-sell legitimately through numerous other methods, including using derivatives.
However, some market participants are uneasy. âWe remain concerned that during this interim time period our members will continue to be exposed to these âdistort and shortâ campaigns,â said Sarah Miller, senior vice-president of the American Bankers Association.
Ms Miller wants the SEC either to extend the emergency order and include all banks or to issue a proposal as soon as possible.
She said the growing volume of âfailures-to-deliverâ are indicative of abusive short-selling, and that a spike in FTDs is invariably accompanied by significant stock drops, not all of which can be attributable to market or bank-specific conditions. âWe suspect that the volume of FTDs has only continued to grow, perhaps dramatically,â she said.
SEC officials, who are also working on amending some existing rules governing short-selling, are still studying the impact of the emergency rule.
Copyright The Financial Times Limited 2008
Listen, we already know that naked short occurs when there are no shares to borrow. All the float outstanding is simply not there, period. Now suppose that we're experiencing one of those monster rally days (eg. +400 Dow points). We're seeing a strong surge of fresh buyers coming into the market from left to right, back to back. But where are they going to get their fills when there are no shares available? I'm willing to bet my ass that you ain't gonna find many REAL sellers. Many of the sellers, smart as they are, will simply lift their offers. Well, well, who do you think will then step in to fill their needs? There ya go, your answer is as good as mine: Them NAKED short sellers! But. wait, isn't naked short selling illegal? Why isn't Uncle Sam bitching about them naked short sellers? Aren't they the same baddies? Why this preferential treatment?!!Quote from palawan:
do you mean shares are destroyed/hidden during a rally?
It's free to naked short the financials again...
The pain resumes in the financials...