SEC just banned short selling??
 

Am I hallucinating or is www.cnbc.com and wsj.com reporting that SEC just banned short selling?





Christopher Cox is a loose cannon. This is going to dry liquidity from the markets... blow up all the hedges goldman and hedge funds have towards their positions.. drive them all out of business.


Is this guy out of his mind??


Also i am not talking about naked shorts here people.. his trying to ban short selling period.

lol


It is the end of free markets as we know it folks!

Good..

I always thought "free markets" actually meant buying and selling goods and services, not the "idea" that some arbitrary piece of paper may go up and down in some fantasy "value"...

I think its banned till January. You can close existing positions but not open new ones.

Wild. I dunno why they just didn't put the uptick rule back in. That woulda been fair enough.

Gonna be some crazy squeezes tomorrow

Short selling is required to keep markets intact.

Short selling and naked short selling are entirely different.


What is now to stop say AAPL from trading at 500/share ?

they banned NAKED short selling....which is short selling stock that you don't even own..

^^^

No .. now they are banning short selling period.

http://www.cnbc.com/id/26781646


This is insane!

I totally agree with you there. All they had to do was bring back the uptick rule, and ban naked shorts on financials!

There is a reason why the banks are trading at the levels they are .. because they are not worth more than what they are trading for. This is the whole purpose of capital markets !!

Why is short selling required?

When something is too expensive people just don't buy it. They don't go and sell things they don't actually own.

Short selling is like pawning your neighbors gold chains because the price of gold has gone up.

good, now all these guys will move over to currency trading... or at least i hope...

Sorry but wrong.

Short selling is selling shares you don't own. If you owned them it would just be regular sale.

Naked shorting is more complicated.

"Naked short selling, or naked shorting, is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. When the seller does not then obtain the shares within the required time frame, the result is known as a "fail to deliver.""

You can read more here: http://en.wikipedia.org/wiki/Naked_short_selling

I guess I'm just stupid...

I never understood why short selling even exists. It's not "investing" as far as I can tell, it's just betting on an over/under for a given stock, no? In this case, you're betting that the stock will drop and if it hits whatever short position you have you "somehow" get paid.

I suppose I'll read up a bit more on it, but it seems like an absolutely silly practice that adds zero value to begin with...

My appologies, thats what I meant.
short selling is to borrow a stock you don't own.. naked short selling is not even borrowing the stock.. which is what needs to be banned.

Short selling is required for hedging purposes, liquidity.

How are you suppose to hedge against a position now?

Liquidity will drop 10 folds with no shorting.


If they actually do go through with this.. its going to start a massive equities bubble.. and when / if they do reinstate the short selling back into the markets its going to cause a mother of all crashes as equities will be brought back to fair value at a fast pace.. causing panic and further mass selling!


its been part of the markets for decades!

20% correction in the markets and the world is loosing it.

Unbelievable!


This will officially eliminate merger arbitrage... pairs... inverse etfs... banks that were hedging positions to protect correlating assets /equities will have to unwind those hedges now.

Christopher cox has lost it. Thats all I know!

(i might be partially pulling the following out of my ass)

Shorting allows people to make money on a declining market, so that investors don't completely pull out, which might be even more catastrophic.

Look at real estate. Once the market started seeing a decline, all the investors fled away and sales completely plummeted. Without the sales volume, it's having a very hard time to get back on it's feet.

Short selling might be a necessary evil to keep gears turning in wall street.

Sami, I'm completely with you.

Perfect example is the buyout of Merrill by Bank of America. The deal is for BOA to pay .86 shares of stock for every share of Merrill. BOA is currently trading for $30.58. Making Merrill worth $26.29 when the deal goes through. However Merrill is trading at just $22.06 right now. You should be able to buy Merrill and short Bank of America if you want to bet the deal will go through.

Lane,

Just wanted to say:

great sig
http://www.cjultra.com/images/hentai_boobs.gif

Holy fuck!!! Now that's some bullshit!!

spot on... :thumbsup

I just got off the phone with a buddy of mine that works in the pits in Chicago.

Everybody is freaking out!!!!!
This is bad.. bad.. bad...

its going to be wild to see what the lower liquidity will do to the market...

They want to pretend that the banks were not houses of cards and insured by us the tax payer so they are throwing shit at the fan and hoping some sticks.

Is this official now? That is absolutely fucking insane. Reinstate the uptick rule and stopping the naked short selling would help. Banning all short selling is just a way to falsely prop up the market so that no one can tell the true value of a stock. I wonder if this was a decision Bush Co helped push through so that they could pass the blame to the next President when the ban gets dropped and the shit hits the fan.

I believe so.

Look at what happened to the chinese markets.. down almost 70% because there is no shorting allowed over there. We ban it here and the markets will tank after the shorts get out (after the cover rally) because no shorts are there to take profits


Shoort squeezes is what keeps this market from crashing 5000 points in one day.

The Option markets couldn't function because you couldn't buy a call. Insurance companies couldn't have variable annuities because they couldn't hedge. Insurance is the foundation of banking, banking is the foundation of the economy and the economy runs the markets.

Why lift the uptick rule then ban it all together?? The people who got the uptick rule cancelled were convinced based on studies that it wouldn't affect the market. I don't see these same people now saying banning it will do any good.

I'm not going to get into the short selling thing here....but isn't 20% the official point at which it becomes a bear market and no longer a correction?

No shorts to cover, none to buy during panics. Hello 3rd world economic system.

LOL...the very definition of short selling is selling stocks you don't own...you borrow the stock, sell it, then buy it back (hopefully) at a cheaper price. Naked short selling is technically illegal, and consists of shorting shares that may not even EXIST.

first I had to stop naked trading now this ?

Shorting adds liquidity to the market...it basically brings more sellers to the table...

You can still hedge your position buy buying put options or short (or ultra-short) ETFs, depending on what exactly you are looking to do....

Maybe the government can just come in and tell us how much we can and can't pay for a stock. They can set all the prices themselves. Why bother with this free market crap anymore?

Short selling helps keep a market stable.. it would be very stupid to out right ban it, but it does need more regulations to stop abuse.

Hey, you're still around? I haven't seen you post in a while. I remember you used to be a regular poster on this board 4 or 5 years ago.