Should shorting be suspended/banned?
- Thread starter sam76
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Trembling Hand
Can be found on the bid
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Very weird creature smithy.
As for your question, I'm happy to point out yet again you are wrong. I actually haven't shorted an individual stock since Jan 08 (from memory).
My pro shorting stance doesn't come from the need to short stocks but for the need to have a balanced market.
Unlike the anti-short side who are motivated by their own needs for stocks and other assets to be in a perpetual bull market no mater what that does to the poor suckers holding the parcel when it pops. Not to mention the damage that is done to the environment when bull markets race ahead of themselves producing development solely for developments sake. Feeding on its self, devouring productive capital and eventual creating slumps that effect mostly the poor suckers on the bottom of the pile as they are the last in and have the most to lose.
But now I have stated that I realize your position and therefore your bias. Your are a poor sucker. I'm sorry for that. And will do what I can as a speculator of fair value to stop the next bull market madness from getting out of control by shorting the **** out of the next sucker rallies.
Please come back when you fall in love with the next rally. That will tell me which one the suckers are getting into.
:::::
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They already have, or should have soon, in China anyway.
http://chinadigitaltimes.net/2008/10/china-will-test-short-selling-margin-lending/
Who knows? If they do introduce short selling back in, and the Shanghai Composite Index stopped tanking and actually creeped back up again independently of the world (which they have done so), other governments would start easing the ban again. Or do a media blackout on how effective the introduction of short selling in the Chinese market was.
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And in Japan they are selling because they are panicking.
http://search.japantimes.co.jp/cgi-bin/nb20081007a1.html
http://search.japantimes.co.jp/cgi-bin/nb20081007a1.html
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Will the powers that be extend the ban tonight in The US?
chops_a_must
Printing My Own Money
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I don't think so.
The US traders are all bitching that the short ban has created liquidity problems in certain stocks, so they are getting larger than normal moves, and the exceptional volatility is keeping buyers away.
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Ok so the banning of 'shorts' did not work.
So what next? I say ban media reporting of the credit crunch. Nasty bunch the media. Mere parasites profiting from the gloomy sentiment and are obviously undermining the good work of treasury departments the world over.
So join me - BAN MEDIA REPORTING, BAN MEDIA REPORTING.
So what next? I say ban media reporting of the credit crunch. Nasty bunch the media. Mere parasites profiting from the gloomy sentiment and are obviously undermining the good work of treasury departments the world over.
So join me - BAN MEDIA REPORTING, BAN MEDIA REPORTING.
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Interesting thought Bushman,
BAN MEDIA REPORTING!
Then we all short News Limited..
I guess to a certain extent they were able to do that for years in Russia and China. But nowdays, the advent of the internet would not let many secrets remain undiscovered.
Could you imagine if The Daily Reckoning ran the press rather than News Limited! The whole financial system of the planet would have collapsed 10 years ago.
I agree with you re the media, causing fear and panic. The markets would be alot more stable without their "after the fact" reporting. I mean, these sort of headlines should have been posted 12 months ago.
Maybe we should get behind banning EASY CREDIT!
BAN MEDIA REPORTING!
Then we all short News Limited..
I guess to a certain extent they were able to do that for years in Russia and China. But nowdays, the advent of the internet would not let many secrets remain undiscovered.
Could you imagine if The Daily Reckoning ran the press rather than News Limited! The whole financial system of the planet would have collapsed 10 years ago.
I agree with you re the media, causing fear and panic. The markets would be alot more stable without their "after the fact" reporting. I mean, these sort of headlines should have been posted 12 months ago.
Maybe we should get behind banning EASY CREDIT!
prawn_86
Mod: Call me Dendrobranchiata
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Sorry, I have been away for the last week or so...
Are we still blaming the shorters for all this...?
Are we still blaming the shorters for all this...?
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Well the ban is still being enforced for shorting.
http://business.theage.com.au/business/shorting-no-go-covered-or-not-20081021-55iv.html
Will the market rise now there are still no shorters to be blamed?
http://business.theage.com.au/business/shorting-no-go-covered-or-not-20081021-55iv.html
Will the market rise
now there are still no shorters to be blamed?
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Short Seller Taken to Court
We have no idea who Giovanni Spagnolo is. We don't know whether he is a professional trader, a small investor, a fund manager or anything else.
But what we do know is the Australian Securities & Investment Commission (ASIC) has taken him to court for short selling. To be more precise, for naked short selling. You see, what Mr Spagnolo did was sell shares that he did not own. Furthermore, he didn't borrow the stock from anyone in order to deliver it on settlement. That is what makes it a naked short sell.
We don't know the full details of the case other than what is on the ASIC website:
"ASIC alleges that between 28 May and 24 October 2007, Mr Spagnolo sold shares and options that he did not own, contrary to Section 1020B(2) of the Corporations Act, in a practice known as 'short selling'... Mr Spagnolo applied for shares and options in capital raisings by the companies. Before they were issued, he agreed to sell them on the stock exchange. Mr Spagnolo failed to deliver the shares and options on the due date for settlement."
The problem as we see it is that Mr Spagnolo appears to have done exactly what large institutions do as a matter of course. The main difference is that the institutions are permitted to do so while the private investor is not.
The underwriter of a share issue can short sell stock in advance in order to reduce their exposure if they are left holding stock from a public offering or a placement. Yet it appears that private investors cannot do the same thing.
We wonder if this is the best way to tighten up the rules on short selling. We don't think it is. There is a much simpler solution that could be easily implemented.
ASIC and the ASX should just follow the same system that operates in Hong Kong.
In Hong Kong investors must deliver stock to the exchange on the settlement day otherwise it triggers a 'buy-in.' That means if you want to short sell you must borrow the stock and deliver it to the exchange. If you don't then the exchange automatically buys the stock back for you, thus closing out the trade.
It is a simple and effective way to almost eradicate naked short selling. It would not be difficult for the ASX to do the same here. It is just a case of whether they have the will to do so.
Cheers.
Kris.
Taken from moneymorning
We have no idea who Giovanni Spagnolo is. We don't know whether he is a professional trader, a small investor, a fund manager or anything else.
But what we do know is the Australian Securities & Investment Commission (ASIC) has taken him to court for short selling. To be more precise, for naked short selling. You see, what Mr Spagnolo did was sell shares that he did not own. Furthermore, he didn't borrow the stock from anyone in order to deliver it on settlement. That is what makes it a naked short sell.
We don't know the full details of the case other than what is on the ASIC website:
"ASIC alleges that between 28 May and 24 October 2007, Mr Spagnolo sold shares and options that he did not own, contrary to Section 1020B(2) of the Corporations Act, in a practice known as 'short selling'... Mr Spagnolo applied for shares and options in capital raisings by the companies. Before they were issued, he agreed to sell them on the stock exchange. Mr Spagnolo failed to deliver the shares and options on the due date for settlement."
The problem as we see it is that Mr Spagnolo appears to have done exactly what large institutions do as a matter of course. The main difference is that the institutions are permitted to do so while the private investor is not.
The underwriter of a share issue can short sell stock in advance in order to reduce their exposure if they are left holding stock from a public offering or a placement. Yet it appears that private investors cannot do the same thing.
We wonder if this is the best way to tighten up the rules on short selling. We don't think it is. There is a much simpler solution that could be easily implemented.
ASIC and the ASX should just follow the same system that operates in Hong Kong.
In Hong Kong investors must deliver stock to the exchange on the settlement day otherwise it triggers a 'buy-in.' That means if you want to short sell you must borrow the stock and deliver it to the exchange. If you don't then the exchange automatically buys the stock back for you, thus closing out the trade.
It is a simple and effective way to almost eradicate naked short selling. It would not be difficult for the ASX to do the same here. It is just a case of whether they have the will to do so.
Cheers.
Kris.
Taken from moneymorning
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Hang on, are you telling me that this whole time, the ban on short selling has only been for private investors only!?
I also fail to see how this investor being prosecuted, how is someone able to get around all the brokerage houses complying with the ban? Did he make his own?
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ASIC (as expected) will be lifting the ban on non-financial stocks from 19th Nov
http://www.asic.gov.au/ASIC/asic.ns...ing for non-financial securities?opendocument
http://www.asic.gov.au/ASIC/asic.ns...ing for non-financial securities?opendocument
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so will the suspension be extended or will evil return finincial markets tomorrow? lol
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SHORT-SELLING on non-banking stocks resumes today after an absence of almost two months, as discussions continue in Canberra on the details of new short-selling disclosure rules.
The ban on short-selling, put in place on September 21 by the Australian Securities and Investments Commission, was criticised by some market participants for hobbling the activities of hedge funds while, they said, increasing volatility in the market.
But ASIC has argued the ban was essential to prevent "unwarranted price fluctuations" and to protect the Australian market from being swamped by short-sellers after the practice was temporarily banned in other countries.
"The ban has been a huge burden, not just on the hedge fund industry but on all investors," said Kim Ivey, chairman of the Alternative Investment Management Association.
Mr Ivey said he expected a "huge improvement in liquidity" with the ban coming off.
"We know that the market has continued to fall since the ban was put in place and volatility has also increased," said hedge fund manager Tom Elliot.
The end of the short-selling ban, for non-financial stocks at least, will usher in an interim disclosure system put in place by the Australian Securities Exchange.
Under this system, brokers must report the short sales made by their clients to the ASX, which will then release a daily report on the total volume of short sales on individual stocks. The first data will be available on Thursday.
Corporate Law Minister Nick Sherry is yet to decide whether this exact regime will continue.
Last week, Mr Sherry introduced to Federal Parliament legislation banning naked short-selling and providing for disclosure of covered short-selling, but said it was not yet decided what length of time would lapse between reporting of short-selling information by brokers to the ASX and its public release.
Industry figures are concerned that daily release of short-selling positions could lead to rumour-spreading in the market and reveal closely guarded investment tactics. Senator Sherry said last week that he was "aware" of industry concerns and would consult with them on the issue.
Mr Ivey, in Canberra yesterday for discussions on the short-selling issue, favoured information being released every fortnight, rather than each day. The Investment and Financial Services Association was also opposed to daily positions being published.
The Securities and Derivatives Industry Association welcomed the end to the moratorium but said it would "wait and see" on the impact of the new rules.
The ban on covered short sales of financial stocks ends on January 27.
Covered short-selling is when a trader borrows shares, then sells them in the hope of buying them back at a lower price. Naked short-selling is the same, except that the seller has not arranged to borrow the shares.
http://business.theage.com.au/business/shortselling-to-resume-20081118-6aet.html
The ban on short-selling, put in place on September 21 by the Australian Securities and Investments Commission, was criticised by some market participants for hobbling the activities of hedge funds while, they said, increasing volatility in the market.
But ASIC has argued the ban was essential to prevent "unwarranted price fluctuations" and to protect the Australian market from being swamped by short-sellers after the practice was temporarily banned in other countries.
"The ban has been a huge burden, not just on the hedge fund industry but on all investors," said Kim Ivey, chairman of the Alternative Investment Management Association.
Mr Ivey said he expected a "huge improvement in liquidity" with the ban coming off.
"We know that the market has continued to fall since the ban was put in place and volatility has also increased," said hedge fund manager Tom Elliot.
The end of the short-selling ban, for non-financial stocks at least, will usher in an interim disclosure system put in place by the Australian Securities Exchange.
Under this system, brokers must report the short sales made by their clients to the ASX, which will then release a daily report on the total volume of short sales on individual stocks. The first data will be available on Thursday.
Corporate Law Minister Nick Sherry is yet to decide whether this exact regime will continue.
Last week, Mr Sherry introduced to Federal Parliament legislation banning naked short-selling and providing for disclosure of covered short-selling, but said it was not yet decided what length of time would lapse between reporting of short-selling information by brokers to the ASX and its public release.
Industry figures are concerned that daily release of short-selling positions could lead to rumour-spreading in the market and reveal closely guarded investment tactics. Senator Sherry said last week that he was "aware" of industry concerns and would consult with them on the issue.
Mr Ivey, in Canberra yesterday for discussions on the short-selling issue, favoured information being released every fortnight, rather than each day. The Investment and Financial Services Association was also opposed to daily positions being published.
The Securities and Derivatives Industry Association welcomed the end to the moratorium but said it would "wait and see" on the impact of the new rules.
The ban on covered short sales of financial stocks ends on January 27.
Covered short-selling is when a trader borrows shares, then sells them in the hope of buying them back at a lower price. Naked short-selling is the same, except that the seller has not arranged to borrow the shares.
http://business.theage.com.au/business/shortselling-to-resume-20081118-6aet.html
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**NEWS FLASH**
Overnight, US bank Citigroup have called for an immediate ban on shorting - AGAIN!
Do I detect *panic* setting in?
Overnight, US bank Citigroup have called for an immediate ban on shorting - AGAIN!
Do I detect *panic* setting in?
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For a stock that was trading near $60 and closed this morning at $4.71 - no wonder some panic starting to set in....
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This is just a another weak attempt to shift the blame for whats happening with their share price. Prices don't go down because of short selling, they go down because a lack of bids, if there were truly value big $$$ would be supporting the share price and accumulating, however thats not the case and no one wants to hold the bag thus there's more offers than bids, simple.
Banning short selling has highly negative effects, it takes away liquidity, reduces ability to manage risk, takes away true price discovery and doesn't allow for mis-managed companies to be effectively priced.
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Guess what - the bans did not work (well according to this research paper anyway). But most of us knew that it was just a bit of propaganda to try and settle the nerves of the market participants. Disaster capitalism needs a scapegoat after all (short sellers, hedge funds, CEO pay, investment banks, the Greenspan put, oil traders etc, etc).
Main findings (from article in Global Press Service):
1. No strong evidence that restrictions on short selling changed the behaviour of stock returns. Stocks subject to the restrictions behaved very similarly both to how they behaved before their imposition and to how stocks not subject to the restrictions behaved.
2. Comparing behaviour across countries where the nature of the restrictions differed, the authors found no systematic patterns consistent with the expected effect of the new regulations, i.e. no evidence of a reduced probability of large price falls.
3. The authors also found no sign of any detrimental impact of the constraints in terms of reduced efficiency of pricing.
4. Regression analysis suggested that changes in stock returns were driven mainly by other factors affecting the financial sector as a whole rather than the restrictions on short selling. That is, some systematic changes in the behaviour of financial sector stocks could be discerned, but no strong evidence of a systematic impact of the restrictions could be identified.
But please, DYOR. Here is the link to the research paper.
www.cass.city.ac.uk/media/stories/resources/the-impact-of-short-sales-restrictions.pdf
Main findings (from article in Global Press Service):
1. No strong evidence that restrictions on short selling changed the behaviour of stock returns. Stocks subject to the restrictions behaved very similarly both to how they behaved before their imposition and to how stocks not subject to the restrictions behaved.
2. Comparing behaviour across countries where the nature of the restrictions differed, the authors found no systematic patterns consistent with the expected effect of the new regulations, i.e. no evidence of a reduced probability of large price falls.
3. The authors also found no sign of any detrimental impact of the constraints in terms of reduced efficiency of pricing.
4. Regression analysis suggested that changes in stock returns were driven mainly by other factors affecting the financial sector as a whole rather than the restrictions on short selling. That is, some systematic changes in the behaviour of financial sector stocks could be discerned, but no strong evidence of a systematic impact of the restrictions could be identified.
But please, DYOR. Here is the link to the research paper.
www.cass.city.ac.uk/media/stories/resources/the-impact-of-short-sales-restrictions.pdf
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