You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
SEC Extends Order Limiting Naked Short Selling Through August 12
- Thread starter EricP
- Start date
David Brooks had a column on John McCain today, where he pointed out that the Republicans have a weekly stategy meeting where they pass out talking points that everyone is supposed to use. McCain would just toss his.
Look at this CNBC video:
http://www.cnbc.com/id/15840232?video=827817522&play=1
Pay attention to the Hedgie and his talking point. Then, go here again:
http://www.deepcapture.com/media-herd-lassoed-by-a-lie/
At the end of the story, you'll see a link that features stories by major media outlets. Notice they all quote the same "researcher/economist" who says the SEC move was a waste. This is in direct opposition from the myriad of studies showing the opposite, including the Bloomberg chart we posted here.
Is there any doubt there is a stategy meeting similar to the Republicans, and I"m sure the Democrats, among HedgeFund managers, lobbyists, reporters? You might have a differering opinion. But the facts are pretty obvious.
Look at this CNBC video:
http://www.cnbc.com/id/15840232?video=827817522&play=1
Pay attention to the Hedgie and his talking point. Then, go here again:
http://www.deepcapture.com/media-herd-lassoed-by-a-lie/
At the end of the story, you'll see a link that features stories by major media outlets. Notice they all quote the same "researcher/economist" who says the SEC move was a waste. This is in direct opposition from the myriad of studies showing the opposite, including the Bloomberg chart we posted here.
Is there any doubt there is a stategy meeting similar to the Republicans, and I"m sure the Democrats, among HedgeFund managers, lobbyists, reporters? You might have a differering opinion. But the facts are pretty obvious.
Fly,
There are several loopholes options market makers can use to avoid delivery of the stock. For example, if they are notified of a buy-in, they offer out the stock (since they don't have to locate, they can offer it naked) and essentially buy their entire position from themselves. This doesn't change anything, but it resets the clock for reg SHO purposes.
Obviously, this kind of loophole contributes to persistent FTD problems and is easy to close without taking away the market makers' naked short selling ability. It just makes naked short selling more risky for them since they will have to deliver.
In fact, if the purpose of more short sale rules is to curb market manipulation rather than price controls, then enforcing delivery is the way to go. Price tests and pre-borrowing are expensive and suck liquidity out of the market. But a market manipulator will have to have massive kahunas to naked short if the risk of buy-in grows with every naked short sale. To increase this risk, the SEC need only enforce its own delivery rules.
The SEC's little games of late clearly have nothing to do with trying to curb market manipulation - it's all about price controls because people freak out when prices go down - unless it's oil, then they freak out when it goes up. Notice there's no talk of shorting curbs in the oil futures market? It's very likely they're selling phantom barrels. Why no outrage?
There are several loopholes options market makers can use to avoid delivery of the stock. For example, if they are notified of a buy-in, they offer out the stock (since they don't have to locate, they can offer it naked) and essentially buy their entire position from themselves. This doesn't change anything, but it resets the clock for reg SHO purposes.
Obviously, this kind of loophole contributes to persistent FTD problems and is easy to close without taking away the market makers' naked short selling ability. It just makes naked short selling more risky for them since they will have to deliver.
In fact, if the purpose of more short sale rules is to curb market manipulation rather than price controls, then enforcing delivery is the way to go. Price tests and pre-borrowing are expensive and suck liquidity out of the market. But a market manipulator will have to have massive kahunas to naked short if the risk of buy-in grows with every naked short sale. To increase this risk, the SEC need only enforce its own delivery rules.
The SEC's little games of late clearly have nothing to do with trying to curb market manipulation - it's all about price controls because people freak out when prices go down - unless it's oil, then they freak out when it goes up. Notice there's no talk of shorting curbs in the oil futures market? It's very likely they're selling phantom barrels. Why no outrage?
Quote from Angrycat:
In fact, if the purpose of more short sale rules is to curb market manipulation rather than price controls, then enforcing delivery is the way to go. Price tests and pre-borrowing are expensive and suck liquidity out of the market. But a market manipulator will have to have massive kahunas to naked short if the risk of buy-in grows with every naked short sale. To increase this risk, the SEC need only enforce its own delivery rules.
Amen, enforcing a balance of supply and demand of the supposedly limited shares of the company, what a concept. :eek:
This is a link to an interesting study of short selling (including naked short selling) from the CATO institute.
http://www.cato.org/pubs/regulation/regv31n1/v31n1-6.pdf
http://www.cato.org/pubs/regulation/regv31n1/v31n1-6.pdf
The last paragraph is noteworthy. Ahh, dang academics. The article was authored by a lawyer and a professor of finance.
"Despite a recent spate of lawsuits and media attention, the
existing literature on naked short selling consists almost
entirely of self-confessed advocacy pieces by lawyers and consultants
involved in naked short selling cases or parties who are
defendants in such lawsuits.
We take a more balanced look at
naked short selling. We have shown that, from an economic
perspective, naked short selling is not fundamentally different
from traditional short selling, is unlikely to have serious detrimental
effects on capital markets, and might even present
some benefits on balance."
"Despite a recent spate of lawsuits and media attention, the
existing literature on naked short selling consists almost
entirely of self-confessed advocacy pieces by lawyers and consultants
involved in naked short selling cases or parties who are
defendants in such lawsuits.
We take a more balanced look at
naked short selling. We have shown that, from an economic
perspective, naked short selling is not fundamentally different
from traditional short selling, is unlikely to have serious detrimental
effects on capital markets, and might even present
some benefits on balance."
The SEC's little games of late clearly have nothing to do with trying to curb market manipulation - it's all about price controls because people freak out when prices go down
==============================
I would have to agree to a point. But what of the threat "across the market" enforcement?
==============================
I would have to agree to a point. But what of the threat "across the market" enforcement?
Quote from ChaosNSX:
Amen, enforcing a balance of supply and demand of the supposedly limited shares of the company, what a concept. :eek:
Isn't that what technical analysis is based on ? Why even file with the SEC, if an outside entity can create new shares with no authority.
and finally, why do I personallyknow five people threatened with brutal deaths?
Makes you kinda wonder. Don't it?????
Quote from Angrycat:
This is a link to an interesting study of short selling (including naked short selling) from the CATO institute.
http://www.cato.org/pubs/regulation/regv31n1/v31n1-6.pdf
Bad guys. They spend a lot of time making stuff up to protect the golden goose.
They equate covered short selling with naked short selling by claiming that the supply effects are identical (and ignore, of course, demand and price effects and the potential abuse of a riskless transaction).
What is so hard to understand that the company, thru an SEC filling, creates shares. You don't get to make more out of air.
without getting caught up in the reasoning and arguments.
Apologize if this has already been discussed, haven't read much of this thread.
But want to know how this affects me. So if the SEC were to "enforce" this market wide- anyone have an idea if the clearing firms have something in the works for real time borrowing of stock?
I am having nightmares of seeing a solid trade where I can bang a couple thousand XOM for 10 seconds but miss out b/c I have to call to get stock.
I know, I know...thats the "law". But anyone know if penson, etc. are working on it?
Apologize if this has already been discussed, haven't read much of this thread.
But want to know how this affects me. So if the SEC were to "enforce" this market wide- anyone have an idea if the clearing firms have something in the works for real time borrowing of stock?
I am having nightmares of seeing a solid trade where I can bang a couple thousand XOM for 10 seconds but miss out b/c I have to call to get stock.
I know, I know...thats the "law". But anyone know if penson, etc. are working on it?