Ritchie on Quindell and short selling

As the FT says, this very obviously raises concerns about the effectiveness of new European rules aimed at forcing disclosure of those who are shorting markets.

But the reality is that what this really proves is exactly why we need publicly accessible registers of the beneficial ownership of all companies around the world, including in the Cayman Islands, who are holding out against them. This activity distorted markets. It undermined fair competition. The outcome is widely considered by many to be harmful. And none of it would have been possible if there had been an open and level playing field on which all operated, including basic data on who was undertaking trades, which is the pre-requisite of fair competition.

Harmful? Investors prick an investment bubble? An over-hyped and highly likely to go bust very soon bubble? This is harmful, distorts markets? Undermines fair competition?

Blimey.

It’s almost as if Robert Shiller didn’t get his Nobel for in part pointing out that it’s the very ability to bet short that helps to prick investment bubbles, isn’t it?

Is there any beginning to this man’s knowledge of economics?

15 thoughts on “Ritchie on Quindell and short selling”

  1. I don’t understand why Murphy doesn’t post full details of his household expenditure online. Seriously, I would, if I were he. Transparency, surely?

  2. Although it has to be said, in Ritchie’s defence, that he is entirely correct that operating in a world-wide market (buyers, sellers and trading opportunities) will generally undermine any attempts by the EU to impose some form of statist idiocy on that market.

    Unfortunately for the world, the LHTD’s solution to the fundamental issue that he recognises in this otherwise drivel is to impose statist idiocy worldwide.

  3. I’m not sure a register of beneficial shareholders would identify holders of short positions in a company. I’m pretty certain however that knowing who was shorting the stock wouldn’t have stopped the shorting of the stock. Gotham were pretty explicit in stating that as well as publishing a research piece on the company, that they might also be involved in taking short positions against the company.

    As with most things he doesn’t understand. Murph just wants the names of the opportunists and counter revolutionary infiltraitors so he can encourage the faithful to launch their next purge.

  4. Aside from the signals short sellers provide, or the fact one should be free to sell as well as buy, short sellers provide an invaluable market service.

    When the proverbial hits the fan and markets crash, it is the short sellers that become the buyers. Without them covering the shorts, prices could fall straight to zero leaving investors no chance to get out with any value.

  5. ‘Why shouldn’t the same disclosure apply to short as long positions?’

    Seriously ? You want people who own no beneficial interest in a company to report that they own nothing ?

  6. Also, I think they probably are the same, aren’t they? you only have to report longs over 3% (or am I out of date here?)

  7. So they do have to disclose, just not to Ritchie and his chums. Seems reasonable, the FCA knows what’s going on in case its of dubious intent and the short seller doesn’t have to disclose publicly because they don’t control the votes.

  8. The reporting conditions for longs and shorts vary according to jurisdiction but frequently are weaker for shorts, which is fundamentally wrong.

  9. Bloke in Germany in Hong Kong

    It is fundamentally wrong. The long disclosure rules are to prevent Porsche doing Volkswagen to the hedge funds. Lack of short disclosure rules means hedgies can do Porsche up the Volkswagen and don’t have to tell anybody.

    So do markets function efficiently with asymmetric information, or is that asymmetric information used by financial whizzes to enrich themselves by that half-cent a share they can manipulate the price by in collusion with their competitors? Before anyone says it’s implausible they’ve just been caught doing it with currency, possibly the most transparent financial market out there.

    C’mon fellow neoliberal capitalist bastards, we want efficient markets, not those that play into the hands of a select and already very rich cabal, don’t we?

  10. Bloke in Germany in Hong Kong

    @BwaB,

    Shortie doesn’t and won’t control the votes, his future customer will. So why should that not be disclosed? That some other entity, X, will control a disclosable share at some future date?

    How about we make that kind of information disclosable? After all, it’s the same information that the hedgies whinged (and demanded changes to the rules of the game they just lost) about Porsche legally not disclosing?

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