Our EU Lords and Masters on short selling

Yes, it\’s icky, capitalistic, so they\’re going to ban naked short selling.

Restrictions on ‘naked short-selling’. Traders will be required to show they have borrowed, or arranged to cover, an instrument before shorting it.

And we get this news on the very day that a short seller has made pots of money out of discovering a fraudulent company listed on the NYSE.

Look, I\’m sorry, I know that this peace in our time in Europe thing is all very powerful but why does preventing Germany from invading France again have to involve being ruled by complete and total cretins?

Can we leave yet?

5 thoughts on “Our EU Lords and Masters on short selling”

  1. Forgive me for being dim, but it don’t see the problem in banning naked short selling.

    It makes the trade more complex as you need a loan counterparty, but could say a touch more beyond that?

  2. “I know that this peace in our time in Europe thing is all very powerful but why does preventing Germany from invading France again…”

    Very droll, Tim; but arguably the EEC/EU has done nothing to keep the peace in post-WW2 Europe – NATO must take the credit for that.

    Tim adds: Droll, I know. It’s actually a quote (near enough) from a Sr. Barroso.

  3. I have had arguments with investment bankers who insist that naked short selling is the work of the devil. For the life of me, I cannot work out the problem.

  4. Are there any plans to stop me from writing a call option and buying a put with the same strike price? (ie a synthetic short). If not, the regulation seems entirely meaningless, other than as a publicity stunt.

  5. At the risk of being Dr. Obvioso, what part of selling shares you haven’t borrowed and have no ability to deliver to the buyer is good? I mean, hey, giving them an IOU marked as being genuine shares is hunky dory, as far as the settlement system is concerned, but other than it’s ALREADY ILLEGAL does any part of your blog rankle? The buyer is given “share entitlements” instead of what they paid for, the company’s float of authorized registered shares is increased illegally by how many magnitudes is anyone’s guess, and the only beneficiary of the illegal activity is the short seller doing the naked short. So forgive my particular dim view, but how is the market made more efficient by opaque counterfeiting? Other than the obvious “She was a whore and deserved raping” argument? Look, sometimes bad companies lie, cheat and steal. Sometimes, short sellers figure that out. Super. No problem. But how does selling virtually infinite quantities of stock of any company with no ability or intention of being able to deliver to the buyer at T+3 equate to the lord’s good work? In the real world, that’s called counterfeiting. I guess in the upside down world of wall street, that equates to, “He needed killin’.” Nice world you got there. I wonder why retail is balking at investing in the wall street casino?

    Duh.

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