Securities and Exchange Commissioner Chris Cox says the old uptick rule isn't coming back. But he added that a new "price rule" with "teeth in it" is being considered by the securities regulator.
The uptick rule, which required a stock to move upward before a short-seller could short a stock, was abolished after decades of operation. Cox emphasized that the uptick rule was closely studied by the SEC before it was repealed. Speaking to CNBC's Erin Burnett on "Street Signs," Cox stated plainly that the SEC was not considering restoring the rule. Advocates of the rule have said that bringing it back might lower market volatility. Cox dismissed that possibility.
"We've had so much of economic study of the uptick rule, I dare that never has an SEC action been taken with more economic analysis," Cox said. "I don't think that the old rule was worth anything."
He added, however, that SEC was considering an unspecified new price rule. "On the other hand, whether a price test with teeth in it might be worth something is, I think, a subject properly for study by the SEC in real time and we've undertaken already to do that."
Every time this man speaks he adds uncertainty and regulatory risk to the markets.
Posted by guest , Jul 16, 2008 2:58PM
isn't bazooka enough? malfunction american POS?
eastguest
Posted by guest , Jul 16, 2008 3:00PM
How do we get this man removed from his post? Seriously what can DB readers do because this guy is dangerous. And clearly enamoured of himself and the power of his role - otherwise he would keep his big fucling mouth SHUT. My god is he trying to compete with hank and ben or merely trying to fuck up the markets more than they already are.
Posted by guest , Jul 16, 2008 3:18PM
Genius@3:00pm...
Cox has not added uncertainty to the markets at all. They're reacting quite nicely to his statement.
What he has done is added strong certainty by saying that the shorts are going to get it in the ass. And he said that with certainty. The only uncertainty remaining is how big the gapes will be in the shorts' assholes.
Cox is doing the right thing. Something stronger and more menacing than 'UpTick' is heading your way.
Keep on whining dude.
The Guy from Delaware
Posted by guest , Jul 16, 2008 3:28PM
This can't be the reason for this short covering rally.
What is?
Posted by guest , Jul 16, 2008 3:35PM
@3:00PM - one way to get rid of this Republican hack would be to do all you can (volunteer, donate, etc.) to elect Obama in the fall.
Posted by guest , Jul 16, 2008 3:46PM
@3:35 - but Obama's from Chicago, doesn't that inherently mean he's on the take???
Posted by guest , Jul 16, 2008 3:47PM
@3:46 - you know who else was from Chicago? Hitler, that's who.
Posted by guest , Jul 16, 2008 3:47PM
Hey GFD - i have an idea lets do away with CFO's, earings reports and audits. Let's not punish a management team by taking a view that their stock should go lower because the management that has levered pp 30x or more with SIV'a,CDO'S,CDS's & MBS's.
The SEC has decided to do away with "CHOICE" from now on stocks go ONLY one way - up because that is what the government has decided. Lets see, the uncertainity part would be what happens after 30 days (or after the one extension) when this rule again changes. I am going to guess that as we get closer to the end of the 30 day period the names on the "special list" might not be as popular as they are today.
Let me ask you this TGFD why is shorting so much more menancing a going long. Each are the natural extension of the other. One person see's a stock going up another going down - thats what makes a market. Be very careful when you remove one party from that trade.
ps - LOL that COX didn't fully understand the effect this would have on option trading as the option traders have asked to be exempt from these rules due to the fact that they COMPLETELY FUCK up the option market (as noted in previous posts by DB readers).
Whether a stock goes up or down should NOT be based upon a "new 30 day rule" made by the SEC.
What the hell do you think Vegas bookies would do if half way through the superbowl the referees decided to take the winning teams starting line and quaterrback give it to the losing team and reverse the score. How much confidence would you have betting next years game?
Posted by diablo , Jul 16, 2008 4:00PM
Me thinks Cox not too bright. He's way over his head. Perfect for the job. Heckuva job, Coxie.
Posted by guest , Jul 16, 2008 4:15PM
Clown@3:47pm...
Read the actual Order which takes effect on July 21st. Check out Note 3:
"Short sales to be effected as a result of a put options exercise are subject to this Order. In addition, we note that short sales used to hedge would also be subject to this Order."
Read it dude. I think the SEC has already thought about the options market.
Guest@3:28pm...
This isn't a short-covering rally now. Maybe early on it was. Actually, the markets are encouraged that Washington has finally stopped pulling its pud and has had the kcufing courage to stand up and do something.
That's my take.
The Guy from Delaware
Posted by diablo , Jul 16, 2008 4:23PM
You can't get naked with these girls:
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
Posted by guest , Jul 16, 2008 4:33PM
Again. Clown@3:47pm...
There is something fundamentally wrong with selling an item that one neither owns nor has 'dibs' on. Pulling non-existent shares out of thin air just to sell into a declining market is even worse. The shorting goon makes money, but the shares suffer, the targeted company suffers, their customers, creditors and employees suffer, and the company may be even forced into bankruptcy.
If you think naked shorting and bear runs are a good thing, you're a fool. Wall St has "dicked the dog" too many times. Time now for some restraints.
I'm glad that you and diablo@4:00pm are not running the SEC.
The Guy from Delaware
Posted by guest , Jul 16, 2008 4:34PM
TGFD - the law of unintended consequences applies here - which is why the 7 option market makers have asked the SEC to be exempted from this rule. If an option market maker cannot hedge him/herself they will not trade puts and calls. Something tells me that Banks/i-Banks cannot afford to have any more business avenues cut off. Pretty soon the only way they will be able to increase their margins will be to triple thier service charges on thier Deleware operations.
ps-
Posted by Anal_yst , Jul 16, 2008 4:41PM
@ TGFD
I'm not sure how you can presume to have even the slightest idea what you're talking about, as everything you've said - and just in the comments to this one post - clearly demonstrate that you're in way over your head.
Please refrain from making comments on topics of which you are so clearly uninformed.
If, though, there is something which you actually understand with any depth, please enlighten us. However, I might add that I have yet to read a comment from you, ever, that suggests that this will ever be the case.
Posted by Anal_yst , Jul 16, 2008 4:52PM
I might clarify that if you were to preface your comments with something like "I haven't put much thought into this..." or "I'm not an expert..." that'd be one thing, but to say things like "Cox has not added uncertainty to the markets at all. They're reacting quite nicely to his statement."
I like how you use "reacting nicely" as a synonym for "going up", because, like most sheep, you presume up = good, when in reality this is not necessarily the case for reasons touched upon more times than I can count in the past few days. Just because the stock goes up does not mean there has been any fundamental improvement in the state of the underlying business.
Posted by StMarc , Jul 16, 2008 5:17PM
Anal_yst: Well said. Going up may be the only thing the Fed wants to see, but the higher something goes, the harder it hits when it comes back down.
M
Posted by FUNdamental , Jul 16, 2008 5:19PM
@anal - well put.
Dela-where, just because it says options in the press release, doesn't mean they have correctly estimated the impact of an off the cuff rule.
Washington isn't standing up and doing something...cox is trying to protect his turf.
Saying clown when you start a post doesn't mean you know what you're talking about. If warren buffett thought banks were off 70% on short selling alone, he'd have bankrupt all of them and bought several billion dollars worth of assets for a fraction of the price.
Posted by guest , Jul 16, 2008 5:25PM
get ready for serious hedge fund regulation.
short selling will be only one part of it.
Posted by guest , Jul 16, 2008 5:29PM
keep investing in china if you hate u.s. financial regulation.
or brazil.
there were army tanks on the streets of the capitols of both bations in the last 25 years. lol
yeah, like that's not gonna happen again.
Posted by guest , Jul 16, 2008 5:29PM
keep investing in china if you hate u.s. financial regulation.
or brazil.
there were army tanks on the streets of the capitols of both nations in the last 25 years. lol
yeah, like that's not gonna happen again.
Posted by guest , Jul 16, 2008 5:34PM
keep in investing europe. lol
the entire economy of Spain is based on property development and land speculation. and i mean entire.
the largest developer just went bankrupt yesterday. the next 20 will go belly up over the next 6 months.
in the good old days, Spain would just devalue.
not any more.
how many years do you guys really think the eurozone will last? 3? 5?
keep investing europe.
lol
Posted by guest , Jul 16, 2008 8:51PM
Anal_yst, StMarc, FUNdamental, & ps...
I just came back on. Thank you for your constructive comments. I will try to keep them in mind.
"In my opinion", the SEC is just beginning their assult on the shorts. Like it or not, I see many more restrictions coming your way. I think it's about time too. I also don't know that the SEC haven't "correctly estimated the impact of their off-the-cuff (as you say) rule" They just may know more than you do.
Also in my opinion, guest@5:25pm is correct in his assertion that "hedge funds are in for some serious regulation". Like it or not, I want to see that happen too.
Sorry I can't be more specific because, as you say, "I'm in way over my head".
Regards,
The Guy from Delaware
Posted by guest , Jul 16, 2008 9:07PM
The SEC proved today even without the reform that it was short sellers who were holding back the pricing efficiencies of this market. Without the constant pounding of fast acting hedge funds the market began to immediately stabilized. The shorts will call this an effort to pump the stock but in reality the opposite is teh case, the shorts had been driving teh market below stabilization.
As for the uptick rule, Cox may have been out foxed by Congress who proposed Legislation to put the rule back in place. If passed into law Cox's hands are tied.
Posted by guest , Jul 16, 2008 9:13PM
This talk of options market makers needing the exemption to conduct their business is bunk. When the SEC began their investigation into the elimination of this exemption they spoke to one of teh highest volume options market makers (citadel) and Citidal claimed they had no comment on the reform because "they rarely use the exemption". There are alternatives to the options market maker they choose not to take it because such alternatives do not come with the heavy payoffs from hedge funds for the rental of the exemption to naked short the equity.
Posted by guest , Jul 16, 2008 9:44PM
Guests@9:07,@9:13PM...
You two posters seem very well informed. Thank you for your knowledgeable posts. Your clarity is much appreciated.
The Guy from Delaware