2010 - The Year Mr. Free Market Died

[Aussiejeff]

May 18 (Bloomberg) -- The Securities and Exchange Commission filed proposed rules under which exchanges would halt trading in individual stocks that swing more than 10 percent.

The circuit breakers, proposed jointly with the Financial Industry Regulatory Authority, would be triggered in all markets by gains or declines over five minutes in Standard & Poor’s 500 Index companies, according to an e-mailed statement. During the pilot program that goes until Dec. 10, the agency will also examine risks to investors created by market orders, and consider steps to deter stub quotes.

Regulators are examining ways to slow down trading during investor panics after the market plunge on May 6 showed how conflicting rules across as many as 50 different U.S. equity venues may worsen selloffs. The SEC and Commodity Futures Trading Commission released a report today that outlines six potential causes of the crash, which sent the Dow Jones Industrial Average down almost 1,000 points and erased about $1 trillion in value before losses were pared.

“We continue to believe that the market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges,” said SEC Chairman Mary Schapiro in a statement. “As such, I believe it is important that all the exchanges quickly reached consensus on a set of uniform circuit breakers that would be triggered when needed.”

Unbelievable.

This is the beginning of the end of Mr "Free Market".

Even the Germans are hopping on to the 'Ve must be bannink all off der shortzers' bandvagon.

So, how are penny stocks going to survive if swings of + or - 10% are jumped on? Those sort of swings can happen many multiple times during any trading day at present. If penny stock traders are going to be continually "banned" from making a trade, they will soon give up even bothering and those stocks will die a slow death anyway?

Meh!

Glad I have retired to a cash management account for now.

Good luck, punters.....

 

[Timmy]

Re: 2010 - The Year Mr Free Market Died

AJ - the quote you provided, and the first part you underlined (assume it was you? - my apologies if not) refers specifically to S&P500 stocks, not applicable to penny stocks at all (at least while the S&P500 stocks haven't fallen to pennies ).
So you can get that money out of the CMT and start punting in the penny dreadfuls again!

 

[Timmy]

Re: 2010 - The Year Mr Free Market Died

Also AJ - you mentioned the German action. I am surprised I can't find any other mention of it on ASF, it seems to me to be a pretty important announcement and the global markets seem to think so too, but no discussion of it to be seen (apart from your post).

As far as I can tell the shorting ban is only on certain financial stocks in Germany (and also on certain debt instruments, and a ban on purchase of CDS), not all of the stocks on their stockmarket - but uncovering the details seems to be difficult.

 

[Aussiejeff]

Re: 2010 - The Year Mr Free Market Died

Also AJ - you mentioned the German action. I am surprised I can't find any other mention of it on ASF, it seems to me to be a pretty important announcement and the global markets seem to think so too, but no discussion of it to be seen (apart from your post).

As far as I can tell the shorting ban is only on certain financial stocks in Germany (and also on certain debt instruments, and a ban on purchase of CDS), not all of the stocks on their stockmarket - but uncovering the details seems to be difficult.

UK news link...

http://business.timesonline.co.uk/t...ectors/banking_and_finance/article7130194.ece

Sure, only "certain" financial stocks have the brakes applied... initially. I see a worldwide trend underway for this sort of "intervention".

more info...

The euro, which had already hit a four-year low against the dollar on Monday, slid even further to $1.212, its lowest level against the greenback since April 17, 2006, after Germany instituted a ban from midnight last night on the naked short sale of shares in the country’s top financial institutions and the bonds of eurozone countries.

Germany also prohibited the purchase of credit default swaps (CDS) on eurozone government bonds, other than for hedging purposes.

Naked shorts ”” when the person selling the asset does not borrow it in advance ”” had been blamed for exacerbating stock market plunges, while some eurozone leaders insisted that the purchase of CDS on Greek debt by speculators worsened the country’s financial problem by making it more expensive for it to borrow.

In a statement yesterday, BaFin, the German financial regulator, said that the financial products had “threatened the stability of the entire financial system”.

The ban will not have an extensive effect on trading, since most of the transactions are done out of London, but the German Government plans to extend it in the future, possibly to cover naked shorting of all German companies.

 

[wayneL]

Re: 2010 - The Year Mr Free Market Died

I wonder when they start confiscating gold?

 

[Timmy]

Re: 2010 - The Year Mr Free Market Died

I wonder when they start confiscating gold?

May as well do it while it is at a high price...

Latest conspiracy theory:
German Chancellor is deliberately botching this Greece bailout to depreciate the Euro so as to benefit German exporters :

 

[Knobby22]

Re: 2010 - The Year Mr Free Market Died

CDS are a joke.

They are a recent invention and their removal will not harm the bond market at all.

They are just a trader play thing. Estonia has CDS and they have no outstanding bonds!! Very little touch with reality.

Death to the free market. Pah!!

I don't reckon you should be able to naked short either. It creates advantages to big players.
Frankly the octupus Goldman Sachs doesn't need us to help.

And finally, if it just a lot of computers trading trends, then where does reality fit in?
There must be market rules to encourage rational behaviour. I though the 1000 point plunge was very scary as what does this mean as to stability of the sharemarket. It is like an amplifier with a feedback loop. If you let positive feedback occur the amplifier will destroy itself.

 

[Aussiejeff]

Re: 2010 - The Year Mr Free Market Died

May as well do it while it is at a high price...

Latest conspiracy theory:
German Chancellor is deliberately botching this Greece bailout to depreciate the Euro so as to benefit German exporters :

Remember this from 6 May 2010?

The euro, which slid to its weakest level against the dollar in almost 14 months, faces “a very serious situation” that requires a response by governments, Merkel said in a television interview in Berlin. That includes regulation of hedge funds and derivatives, and a review of the role of credit- ratings companies.

“In some ways, it’s a battle of the politicians against the markets” and “I’m determined to win,” Merkel said today. “The speculators are our adversaries. That’s why we have to weigh our words more carefully than ever and stand united.”

http://www.bloomberg.com.au/apps/news?pid=20601100&sid=aeXrn_a39NJw

The bit about Mutti Merkel being "determined to win" says a lot about the German competitive spirit!

But, at all cost?

I suppose if Greece sinks beneath the debtwave, Germany could always march in and reclaim their assets?

Pssst..... don't mention the [size=-4]war[/size].

 

[Aussiejeff]

Re: 2010 - The Year Mr Free Market Died

Tonights developments courtesy of Mutti. All of which IMO will only end in tears. Or worse.

Merkel said Germany will lobby governments to introduce a tax on financial markets, and for ratings companies to come under European supervision so governments regain “primacy” over markets.

Germany will act alone where necessary, she said, citing the short-selling ban by financial regulator BaFin. “All of this will stay in effect until another solution has been found at the European level,” she said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=asBhZM6Hapyk&pos=2

Germany cannot act alone.

Madness.

 

[Dowdy]

The irony is, the only free market left is CHINA

 

[skyQuake]

just like to point out its NAKED short selling.

Which is essentially what we have in Aus for almost 2 years now.

 

[Aussiejeff]

just like to point out its NAKED short selling.

Which is essentially what we have in Aus for almost 2 years now.

No it is not only naked shorts.

If you read the articles fully, you will see that Mrs Merkel ALSO wants to slap a tax on ALL financial markets.

Merkel said Germany will lobby governments to introduce a tax on financial markets, and for ratings companies to come under European supervision so governments regain “primacy” over markets.

That is significantly more than just a naked short ban!

The effect on a lot of $Billion Euro hedge funds etc would be pretty significant?

 

[skyQuake]

No it is not only naked shorts.

If you read the articles fully, you will see that Mrs Merkel ALSO wants to slap a tax on ALL financial markets.

That is significantly more than just a naked short ban!

The effect on a lot of $Billion Euro hedge funds etc would be pretty significant?

Yeh, the ban didn't really do anything.

Government regaining primacy over the markets? Goodbye sweet capitalism!
Just throwing more uncertainty into already muddled markets..

 

[Timmy]

More German legislation, this just in:

http://ftalphaville.ft.com/blog/2010/05/19/236111/witz-des-tages/

 

[Whiskers]

Re: 2010 - The Year Mr Free Market Died

May as well do it while it is at a high price...

Latest conspiracy theory:
German Chancellor is deliberately botching this Greece bailout to depreciate the Euro so as to benefit German exporters :

Yes, I heard something similar.

I think the german ego is just as big as the yank and will exploit any opportunity it can get.

 

[Aussiejeff]

Germany wants to extend a ban on naked short selling that angered other countries last week to cover all shares listed on its stock exchanges, according to government documents seen by AFP on Tuesday.

http://www.thebull.com.au/articles/a/11698-germany-may-extend-ban-on-short-selling.html

Now, not just for a few "certain stocks" eh?

Mad Mutti on the rampage!!

Germanicophiles please insert appropriate response here.... _ _ _ _

 

[Timmy]

Re: 2010 - The Year Mr Free Market Died

Latest conspiracy theory:
German Chancellor is deliberately botching this Greece bailout to depreciate the Euro so as to benefit German exporters :

Quickie:

More Awesome Numbers From Germany's Big Corporate Giants
http://www.businessinsider.com/more...aign=Feed:+businessinsider+(Business+Insider)

Chemical maker BASF beat expectations, saw earnings rise 94% from last year
...
Volkswagen says earnings tripled from last year.