SEC's Restrictive New Short Sale Proposal --- NOW is your only chance to influence it

[moneymonger]

Quote from Robert Weinstein:

I find it interesting that there are traders that have posted that not only are they not against the SEC proposal but would actually be in favor of it. (I am not trying to attack anyone. I do think that perhaps some of the opinions where shot from the hip and by people who may not do a lot of trading from both sides long and short)

Firstly and this is perhaps the most important point of this debate is that all of the proposals including the one the SEC has pushed into the front is a ban ONLY on YOU. Not the market makers, Specialists, or option market makers.

So the whole idea that this is a ban on short selling is ludicrous at best and will most surely hurt (retail) day traders both long and shorts in favor of market makers.

With this so called "ban" in place the next time you want to short a stock you WILL get in line after the market makers get their fill first.

You don't short stocks and only trade to the long side? Well sorry but don't expect much of a change one way or the other. You should have no opinion that this ban will aid your trading in any way. If you do you have most likely based it on zero public evidence (I would welcome someone to show some evidence that a ban would be good for anyone OTHER than market makers)

Some say that Bear and LEH went down due to "bear raids" but I would argue that they went down because they went broke (and I lost a bundle with being long LEH so I remember that one well but I sure as hell don't blame shorts for either my loss or that LEH went BK)

I think its a very scary thing to turn the clock back and allow for more manipulation by the big money on Wall St and suggest that we let the SEC know that we want to keep the playing field as level as we been able to so far get it. Don't turn yourself into a second class citizen with stocks. Ask the futures traders if having shorts is a bad thing. After all every single futures contract has a long and a short.

Thanks for reading my opinion on this and I wish you guys the best in trading.


Robert

Good Post! If the proposed restrictions do not apply to market makers, specilists etc. then this creates an apartheid caste system within the market. How ironic that the Dem's would bestow Wall Street firms with exclusive rights over average citizens in the marketplace? Could there be an equal protection challange to this if it is implemented? After all, the retail investor should be entitled to an equal playing field in terms of execution
versas institutions.

 

[Robert Weinstein]

Quote from moneymonger:

Good Post! If the proposed restrictions do not apply to market makers, specilists etc. then this creates an apartheid caste system within the market. How ironic that the Dem's would bestow Wall Street firms with exclusive rights over average citizens in the marketplace? Could there be an equal protection challange to this if it is implemented? After all, the retail investor should be entitled to an equal playing field in terms of execution
versas institutions.

In its current form its not IF there are exceptions its right there in the proposal.

I would point everyone to read Section B page 9 where the exceptions begin (I actually suggest people read the whole thing so you can be informed directly)

"In the Proposal, the proposed modified uptick rule and the proposed uptick rule included types of short sales that would not be subject to the requirements of the proposed rules.28 For example, the proposed modified uptick rule would require that a trading center’s policies and procedures be reasonably designed to permit the execution or display of a short sale order marked “short exempt” without regard to whether the order would otherwise be impermissible.29 The proposed uptick rule included a number of exceptions to its price test restrictions on short sales that, for the most part, paralleled the provisions in the proposed modified uptick rule relating to short sale orders that could be marked “short exempt.”"

Here is some of the excptions on page 9 and 10.

Whether requiring a policies and procedures approach, or a prohibition approach, the alternative uptick rule could also include “short exempt” provisions or exceptions for: (i) a seller’s delay in delivery as set forth in Section III.A.2.b of the Proposal;32 (ii) odd lots,

Page 10

as set forth in Section III.A.2.c. of the Proposal;33 (iii) domestic arbitrage, as set forth in Section
III.A.2.d. of the Proposal;34 (iv) international arbitrage, as set forth in Section III.A.2.e. of the Proposal;35 (v) over-allotments and lay-off sales, as set forth in Section III.A.2.f. of the Proposal;36 (vi) transactions on a VWAP basis, as set forth in Section III. A.2.h. of the Proposal;37 and (vii) riskless principal transactions as set forth in Section III.A.2.g. of the Proposal.38

The last line of in Section B page 10 sums it up pretty well that this restriction is to be placed on YOU and ME and NOT on Wall street market makers, Specialists, Option market makers and basically in a nutshell the Wall st insiders. Every one else can take a second class seat and wait in line

"We ask for comment on the scope of any such exception and the conditions that should be imposed to ensure that it is used only for bona fide market making." (SEC words not mine as can be seen on the SEC website)

From my view I see this as Wall St paying off politicians(primarily congressional) and they are not paying back by putting pressure on the SEC to allow them to step in front of the "outsiders". Its no secret that the SEC is under pressure to "do something" and proposal everyone wins. The MMs get to make more money, the politicians get more political contributions, the SEC gets to crack down on what "everyone knows" causes the market to go down and the average trader, well I guess they get screwed as potential profits that they could be making are now reserved for a select group.

On a different note I almost never short on what would not be an uptick as I fade price when shorting. So some could argue that I would not be harmed much (if at all ) by this proposal with the way that I currently trade. Wo why do I care?? Because tomorrow I may find a profitable setup that does include it.

Why anyone would voluntarily allow their trading to be viewed as second class is beyond me. I find it insulting when someone proposes that the market is served by "bona fide market making" when a MM shorts a stock at will and the average trader can not.

There will be winners and losers with this and I think we can mostly agree on how we are going to fair against GS and the other big MMs when they get to stand first in line everytime.

Best to you guys next week

RW

 

[bears21]

Quote from Robert Weinstein:

In its current form its not IF there are exceptions its right there in the proposal.

I would point everyone to read Section B page 9 where the exceptions begin (I actually suggest people read the whole thing so you can be informed directly)

"In the Proposal, the proposed modified uptick rule and the proposed uptick rule included types of short sales that would not be subject to the requirements of the proposed rules.28 For example, the proposed modified uptick rule would require that a trading center’s policies and procedures be reasonably designed to permit the execution or display of a short sale order marked “short exempt” without regard to whether the order would otherwise be impermissible.29 The proposed uptick rule included a number of exceptions to its price test restrictions on short sales that, for the most part, paralleled the provisions in the proposed modified uptick rule relating to short sale orders that could be marked “short exempt.”"

Here is some of the excptions on page 9 and 10.

Whether requiring a policies and procedures approach, or a prohibition approach, the alternative uptick rule could also include “short exempt” provisions or exceptions for: (i) a seller’s delay in delivery as set forth in Section III.A.2.b of the Proposal;32 (ii) odd lots,

Page 10

as set forth in Section III.A.2.c. of the Proposal;33 (iii) domestic arbitrage, as set forth in Section
III.A.2.d. of the Proposal;34 (iv) international arbitrage, as set forth in Section III.A.2.e. of the Proposal;35 (v) over-allotments and lay-off sales, as set forth in Section III.A.2.f. of the Proposal;36 (vi) transactions on a VWAP basis, as set forth in Section III. A.2.h. of the Proposal;37 and (vii) riskless principal transactions as set forth in Section III.A.2.g. of the Proposal.38

The last line of in Section B page 10 sums it up pretty well that this restriction is to be placed on YOU and ME and NOT on Wall street market makers, Specialists, Option market makers and basically in a nutshell the Wall st insiders. Every one else can take a second class seat and wait in line

"We ask for comment on the scope of any such exception and the conditions that should be imposed to ensure that it is used only for bona fide market making." (SEC words not mine as can be seen on the SEC website)

From my view I see this as Wall St paying off politicians(primarily congressional) and they are not paying back by putting pressure on the SEC to allow them to step in front of the "outsiders". Its no secret that the SEC is under pressure to "do something" and proposal everyone wins. The MMs get to make more money, the politicians get more political contributions, the SEC gets to crack down on what "everyone knows" causes the market to go down and the average trader, well I guess they get screwed as potential profits that they could be making are now reserved for a select group.

On a different note I almost never short on what would not be an uptick as I fade price when shorting. So some could argue that I would not be harmed much (if at all ) by this proposal with the way that I currently trade. Wo why do I care?? Because tomorrow I may find a profitable setup that does include it.

Why anyone would voluntarily allow their trading to be viewed as second class is beyond me. I find it insulting when someone proposes that the market is served by "bona fide market making" when a MM shorts a stock at will and the average trader can not.

There will be winners and losers with this and I think we can mostly agree on how we are going to fair against GS and the other big MMs when they get to stand first in line everytime.

Best to you guys next week

good responese and it does spell it out in bold letters. what i think could be possible is that prop traders or other firms that trade professionally will find a loophole to establish some sort of market maker status and therefore be exempt from this rule. bullets were the old ticket and now it seems like if you cant beat em join em. always new and inventive ways to get around rule changing. ex. the new way to be registered without a license thanks to the cboe. now the true retail trader will have to adapt because nobody looks out for the true retail guy.

RW

 

[zdreg]

the bottom line is that goldman and najarian and other members of the old boys club will get their way at the end of day.
libertarian posts and level playing fields are not the way the world works.

the small investor/ trader stepped on goldman's toes without an uptick rule. those halycon days will soon be gone.

goldman believes in rigged markets and obama believes in gov't dictates not in markets.
hold onto your wallet.

that being said u still send your comments to the SEC.

 

[Anaconda]

Quote from Robert Weinstein:

I find it interesting that there are traders that have posted that not only are they not against the SEC proposal but would actually be in favor of it. (I am not trying to attack anyone. I do think that perhaps some of the opinions where shot from the hip and by people who may not do a lot of trading from both sides long and short)

Wow you really do not get it, do you?

This ruling creates an inefficiency that can be exploited for prime risk/reward ratio trades. AKA a real edge.

When this passes, assuming this goes through, I will be on the phone with my acquaintances in the daytrading industry (at least whoever is left) to discuss what tools are available to take advantage.

 

[Anaconda]

Quote from zdreg:


the small investor/ trader stepped on goldman's toes without an uptick rule. those halycon days will soon be gone.

I think you are completely wrong there. Elimination of the uptick rule actually benefited any entity heavy in HFT, like Goldman.

 

[gkishot]

Quote from Anaconda:

Wow you really do not get it, do you?

This ruling creates an inefficiency that can be exploited for prime risk/reward ratio trades. AKA a real edge.

When this passes, assuming this goes through, I will be on the phone with my acquaintances in the daytrading industry (at least whoever is left) to discuss what tools are available to take advantage.

Down-tick rule works even better for you. Maybe you need to start lobbying for this one.

 

[Anaconda]

Quote from gkishot:

Down-tick rule works even better for you. Maybe you need to start lobbying for this one.

Ok well you can either start preparing for what is actually good news if you are a daytrader or you can continue being an idiot.

Your choice.

 

[gkishot]

Quote from Anaconda:

Ok well you can either start preparing for what is actually good news if you are a daytrader or you can continue being an idiot.

Your choice.

Right, the wider the uptick the better. As a matter of fact it should be so wide that even anaconda won't get a fill. So much for taking advantage of the uptick inefficiency.

 

[zdreg]

Quote from Anaconda:

I think you are completely wrong there. Elimination of the uptick rule actually benefited any entity heavy in HFT, like Goldman.

goldman was successful with HFT even when there was an uptick rule. HFT is on the way out. exemption from the uptick rule for market makers, arbitrage activity etc will be an annuity for GS.