Should shorting be suspended/banned?

[nioka]

I short sell stock I don't own to hedge my deltas sometimes
Is there a problem??

YES.

 

[captain black]

.... the link in Captain Black's post. <>Did I read it correctly? Does it really say that?

It is correct, ASIC is extending the ban to covered short selling as well. I've seen some amazing things in my 40 years on this planet.... this ranks up there with the best of them....and on a Sunday night for goodness sake, talk about making it up as they go.

 

[freddy2]

It seems odd that if you oppose something you ar ignorant. I note that it seems to be the same people supporting short selling are the same ones that promote margin borrowing, another aspect of investing that has contributed to the downfall of many companies. I can remember being told I was ignorant when I opposed the notion of margin borrowing a year or so ago.

I'm often wrong but there is one thing I am dead certain about. Margin borrowing of money that didn't exist and short selling by "fraudsters" is 99% responsible for the current financial problems in this world.

IMO excessive leveraging by executives with heads I win/tails you lose incentives is what caused this crisis, short selling is not. So I don't know where you got that all those in favor of short selling promote "margin borrowing". I have never short sold (or equivalent position) and I think short selling is good, as it can give me cheaper prices.

 

[wayneL]

YES.

Sorry this is not an insult, it is just the truth. You are a fool if you think it is wrong to short sell to hedge delta. It would destroy the options market and cause outright crashes.

Evidence that your opinion is worthless. You are going on ignore.

 

[skyQuake]

YES.

Do you know what delta hedging is?

 

[It's Snake Pliskin]

It is correct, ASIC is extending the ban to covered short selling as well. I've seen some amazing things in my 40 years on this planet.... this ranks up there with the best of them....and on a Sunday night for goodness sake, talk about making it up as they go.

Thanks Captain.

We are planet of the apes.

http://au.youtube.com/watch?v=YRNW7IkFpFY

http://au.youtube.com/watch?v=Jen6d8zlVI8

 

[chops_a_must]

YES.

You are a moron outright.

Way to pour a liquidity crunch on the market at the same time as a credit crunch.

Move on grandpa.

 

[cordelia]

Cordelia,

Without attack I posted which was not directed at you.

You don't short yourself as you have stated.

I never said you didn't understand shorting.

Take it easy.

I apologise....I should have spent more time reading your post before replying so quickly...I am not in the habit of flaming but its easy for people to misunderstand and overact to what is posted on Internet forums without visual cues etc etc....However in my case there is absolutely no excuse since my background is research in online communication....

 

[wayneL]

I posted this in the options forum and is just as pertinent here so:

More consequences, glitches and Things That Make You Go Hmmmmm, from http://adamsoptions.blogspot.com/ (Ex market maker)

A little confusion as to whether MM's have some sort of exemption to the New World Order.

Just heard on TV that an "Unintended Consequence" was the freezing up of options markets.

Unintended? C'mon Ben and Hank, I thought you read my site? We've gone over the topic a bit lately. Gives you real confidence how well they thought out this plan.

Well, a couple martini's later and the Options Market Makers Are Exempt! They can carry on their anti-American stock shorting with impunity again!

This from my fried Greg.

The Securities and Exchange Commission’s Division of Trading and Markets today issued the following statement:

“The Commission staff is recommending to the Commission a modification to its order prohibiting short selling in securities of specified financial firms. This modification would extend, for the life of the order, the exemption for hedging activities by exchange and over-the-counter market makers in derivatives on the securities covered by the order.”

​

So we have that going for us.

Which is nice.

Seriously, it's good from the standpoint that at least they'll be able to sell puts now. But what if I want to sell them? I'm going to still need a better price if I can't short stock. So it's a bit of an untenable situation if the floor can sell them way better than anyone else.

What about firms that are both options market makers and a million other different things. I'm looking at you Susquehanna. Are they going to wall off short sales in only stocks in which they make options markets? Which is probably everything.

Now that Pandora's Box is open, how about market makers in ETF's who need to sell baskets of stocks to hedge? Or anyone that buys a Convertible Preferred? Or......whatever, it's just too ridiculous on so many levels that they took this step. I mean the step of banning shorts altogether, not relaxing it a bit.

Bottom line is it's all untenable. What's going to happen when they walk us back out and allow shorting again? Would it have been so tough to actually enforce the rules to begin with?

Credit where due to some Bubblevision pundits. Liesman, Santelli, Haines, Faber, Rhatigan, come to mind All deviated from the usual party Cheerleading Line and called out the powers that be on this.

 

[sam76]

This thread went way above and beyond me very early on.

looks like naked shorting has been banned and covering is being restricted as of tommorow on the ASX

http://www.asic.gov.au/ASIC/asic.ns...ered short selling not permitted?opendocument

 

[CanOz]

This thread went way above and beyond me very early on.

looks like naked shorting has been banned and covering is being restricted as of tommorow on the ASX

http://www.asic.gov.au/ASIC/asic.ns...ered short selling not permitted?opendocument

I think they say that covered shorting is restricted...pretty much banned altogether.

Existing shorts must be allowed to cover (buy back) their positions at some stage.

Cheers,


CanOz

 

[cordelia]

I posted this in the options forum and is just as pertinent here so:

More consequences, glitches and Things That Make You Go Hmmmmm, from http://adamsoptions.blogspot.com/ (Ex market maker)

At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.

 

[sam76]

I think they say that covered shorting is restricted...pretty much banned altogether.

Existing shorts must be allowed to cover (buy back) their positions at some stage.

Cheers,


CanOz

You're right on second look.

One must read things twice before posting.

Apologies all.

 

[chops_a_must]

At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.

The ultimate conclusion is an illiquid market.

Because no-one is buying on a fall, and it is difficult to hedge for the big guys.

 

[Trembling Hand]

OMG this is truly getting ridiculous.

When I posted this I didn't realize how absolutely stupefying this was going to get.

The really poor thing here is we are going to have a rip roaring rally on Monday that was already in the making and all the Muppets, fools, pollies and clueless punters are going to be left with the idea that it was the shorts all along.

Not the excessive leverage of junk assets to people that can't pay for it.

Mean while the secondary markets that the real money use to hedge, futs & options, will evaporate with that so will the big money. RIDICULOUSE.

 

[wayneL]

At the risk of looking like a complete idiot, could you please explain that in simpler terms...Its way over my head and I have very little knowledge of options but I am interested to know what the implications of this move by the ASX will be.

I'm about to nick off for an afternoon of fun and frivolity, will get into this a bit later.

 

[nunthewiser]

OK ...... CFD,s being an artificial market etc etc .......... by rights they should not be affected by this ban the shorts bullsheet and we can still trade these downward moves via them ?

 

[cordelia]

I'm about to nick off for an afternoon of fun and frivolity, will get into this a bit later.

sounds like a perfectly sensible thing to do......have a good one

 

[Trembling Hand]

OK ...... CFD,s being an artificial market etc etc .......... by rights they should not be affected by this ban the shorts bullsheet and we can still trade these downward moves via them ?

Who knows. I would guess DMA model is out. MM who knows. This is the silly thing. You can't just turn these things off. They are all connected to a normal market. A huge amount of transactions are arbitrage. have a look at the volume on Tuesday. That was arbitrage unwind. Have a look at the volume on the last Friday of each month that's delta hedging unwinding.

Most of the fut BOTs are arbitrage. If that market gets any thinner I will be able to manipulate it

 

[nunthewiser]

Personally think this rash" ban the short " move is going to have more ramifications than leaving the derivatives as they were ...... liquidity is sure going to be intresting from here on in and woe betide us when these bigger fish decide to drop the bundle completely instead of trading there way through instead .... gawd help us i reckon and yes agree on TH earlier post re rally and the blind saying its because of the short ban ....... not going to profess i know the outcome from here but boy do believe that we are in for some intresting times with a LOT more market manipulation thrown in for good measure while the markets got no backround players