The Journal reports that the Securities and Exchange Commission has issued new rules aimed at curbing “a certain type of short-selling.” Starting at 12:01 a.m. EDT on Thursday, short sellers and brokers must deliver securities borrowed for short sales on the trade settlement date, three days after the transaction, or face the wrath of Chris Cox. Additionally, the SEC closed the loophole that allowed market-makers to use naked shorting to smooth out temporary trading imbalances (the hole will officially be plugged five days after it is published in the Federal Register). Finally, Cox and Co. passed an anti-fraud rule aimed at short sellers who lie about their ability to deliver borrowed securities.
The full threshhold list of stocks on which the shorting restrictions apply can be found here.
— Advertisement —
Comments (51)
Leave a comment
You can log in with your account or comment as a guest below.
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
I’m a big fan of short selling. But I respectfully disagree with you on this one.
To wit:
53. Is it possible.
If domestic hedge funds can be considered culprits in the bear run on BSC, why not any other entity with sub.stan.tially deeper pockets and an ideological commitment to the destruction of The Great Satan?
Why is everyone afraid to consider the likeliest explanation?
Allowing naked shorting in this environment is like giving free jet-pilot lessons to al quaeda.
I just have to say, when I saw the headline, I knew it was B. Levin, without even seeing the “byline.”
I respectfully submit that you really should stick to fashion.
What about the Uptick Rule?
This wont affect funds like Greenlight who take large well-researched directional postions so are able to plan to pre-borrow the stocks. It will hit daytrading desks esp at small bd’s who play the vol all day. I’m find with that.
What about the Uptick Rule?
wait what? anyone know how this will effect options pricing with market makers unable to hedge delta?
What about the Uptick Rule?
I am also find with that.
I don’t really comment on typos, but WTF does the last sentence say?
IT’S ABOUT TIME
Fuck Cox. What about the Uptick Rule?
9: does ” …short sellers who lie about… ” work for you ?
This will hurt the options industry quite a lot, but in the long term will probably result in better ways to borrow stock (think Liquidnet, Quadriserve…)
So will the baddies strike while the iron is hot? Could MS be shorted into the ground before the rules are enacted?
none of these stocks were hard to borrow when they got plastered. This didn;t make a sh*ts difference when they tried it the first time. the Buy in on settlement rule is the only change. DumB
enough already! any possiblities that these ground-breaking, earth-shattering, upheavels on wall street be linked to something fun, like a Jeff Epstein massage, or an Eliot Spitzer manicure. We’re all getting bummed out, and we need to celebrate the last days of summer. How about a change of content.
Cramer is talking about a list of stocks which accompanies this new rule. Does anyone know where I can find this list? TIA
@9 “threshold security” is a defined term
WTF is up with the TED spread.
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND
Is LIBOR too high? Or are 3-mo Bills too low? Or both?
@17: “@17: The full threshhold list of stocks on which the shorting restrictions apply can be found here (http://www.nasdaqtrader.com/Trader.aspx?id=RegSHOThreshold).”
Banks don’t want to lend to each other and Fed has lost ability to control rates
I heard the 1-mo traded negative 1 basis point this morning. Is that even possible?!
Hahaha
This is pretty stupid but I still can’t for the life of me comprehend (besides the weak technology infrastructure in place still at many participants) why equities still settle t+3
besides that, why pummel MS? I haven’t read their whole release, but it looked pretty decent, especially in the context of whats happening. Shorts are really gonna end up shooting themselves in the foot when theres no-one left to be counterparty to their trades, no PB’s left, etc…
myopia here is ridiculous
MAYOOOOOO
MAYOOOOOO
MAYOOOOOO
MAYOOOOOO
GS just getting crushed…..
The uptick rule is absolutely untenable in this age of electronic trading. Cramer’s an idiot.
Watch an active stock trade with a good Level II quote monitor. The number of trades per second goes north of 100 very often, with trades occurring on many different venues.
There’s no way to actually implement a real uptick rule. The uptick rule is simply an anachronism that didn’t even work well when stocks traded on the specialist system at the NYSE.
I also have to say that that the shareholders’ selling of these stocks contributes *far more* downward pressure to stock prices than short seller sales.
GS Oct 50s at $5.
-retail
Massive money fund redemptions hitting the USD hard right now.
Everyone just wants to get into short-term bills. This could get very nasty.
@ 6 market makers can hedge delta ON SHARES THAT CAN BE BORROWED.
WTF is wrong with that?
@19 – BOTH…1) Libor is a bullsh!t # and 2)people are running from their money markets into treasuries
Lots of shiny happy people on http://www.nyse.com. would never know the stock market is tanking right now looking at this website.
MS trading at $17
When does SLM go?
40x through common, 30x through pref, lots of private student on its books to go bad and still at >2x book.
@36 SLM doesn’t happen until after the election
the fucking horse has bolted
TED spread is correlated to financial markets turbulence. Hope this time it doesn’t break the airplane into pieces…
And Cox is a moron with no cojones. Ban naked short selling for the entire market, why only “protect” some companies in a list? With no principles, he should stay out of this. Why Paulson gets a little bit of sympathy from me (and he owes me some), Cox is a nothing.
– diablo
@ChristopherCox…
How about this for a new SEC rule…
You can’t sell something you don’t already own.
The Guy from Delaware
I first heard this on Fox Business around 9am ..called my pals and dumped positions. Fox had it right. Tough on shorts!!!
@40 – how about this you can’t buy something unless you can pay in FULL!
@#42…
“You can’t buy something unless you can pay in FULL.”
I like it. Your #42 and my #40 will cover ALL the buys and sells.
diablo@#39…
I agree with you. Cox is a clown.
The Guy from Delaware
@ 39. you reason like someone who’se been on the street for a year, or who has never made a market, or read a book, or gets his information from bloomberg headlines.
@ 39 furthermore, do you even understand the difference between shorting borrowed shares and naked shorting?
And the SEC is far behind
Down in the swamp with the gators and flamingos
A long way from Liechtenstein
I’m a junk bond king playing Seminole Bingo
What’s wrong, you scumbags?
NSS has always been illegal. The scum at the SEC just hasn’t been enforcing the law.
What should be done, is to retrace the transactions of many of you scum … and lock your corrupt asses up for a real long time,
@45
I had to go to the SEC press release to figure out exactly what Bess and the WSJ are really talking about. This is progress. But what took Cox so long? He’s a moron. Evil too.
http://www.sec.gov/news/press/2008/2008-204.htm
Short selling is OK, but naked short sales are not, no matter who does it, or to whom. I don’t care if you disagree with that.
In my opinion there’s still too much wiggle room in this order. But who cares about my opinion?
Clear now?
@40 – how about this you can’t buy something unless you can pay in FULL!
this is not the list of the stocks to which the rules apply.. this threshold list has been in effect for five or six years
MfGkvC I value the post.Much thanks again. Great.