German ban on Naked short selling

Was just looking at the DOW its down 107 points over a fairly short period and this seems to be the reason anyone explain why such short notice of this change it comes in at midnight … falls.html

Besides printing one other thing that governments are best of breed at…

Creating uncertainty…

This will increase volatility and reduce liquidity in the mkts

ALS other item of note is prposed cgt of 50% across the pond

The Dow doesn’t need a “reason” to be down 100 points. Sure it was down over 1000 points a week or so ago and nobody has yet been able to find a reason.

I dont like that sentence at all, is it American BS or is there a possibility that the Germans know something we dont and if so what

maybe the ECB is running out of ideas to keep propping up the EURO, last resort is to limit short selling of EURO bonds, not much recent disclosure of how much the ECB has spent supporting the EURO, a trillion anyone:??

I don’t read anything into this. Naked short selling was always a disgrace, but for some reason - mainly Wall Street money and congressional corruption I suppose - the SEC has always gone easy on this and only cracked down on it after the money was made on shorting the banks in 2008 and early 2010. Then the SEC lifted the restrictions and forgot about it. Typical of the utterly corrupt and craven attitude of the administration to its Wall Street bosses who are its biggest donors (Obama’s largest donor was Goldman Sachs)

Germany has clearly had enough and decided to go it alone. Look at it more in context of tough posturing around today’s ECOFIN meeting on hedge funds where the UK was told to get stuffed.

Naked short selling is very beneficial to the common investor. Maybe you are confusing it with failing to deliver?

Naked short selling is simply when a seller promises to deliver the shares he sold on the settlement date, but hasn’t yet sourced the shares. He has two or three days to go out and find the shares and then deliver them to the buyer. If he fails to deliver on time then there are penalties (often huge penalties depending on the exchange where you have failed).

The bottom line is that investors will have to pay higher prices in markets where naked short sellers are not allowed to sell. They will be forced to buy from the sellers who already have possession of the shares. The investor shouldn’t care whether the seller has possession on the trade date or not - he should only care that he receives delivery at the agreed settlement date in two (or three) days.

I agree Septic, naked short selling has always, as far as I am aware, been against the rules. That they (the rules) haven’t been enforced is disgraceful, if unsurprising - it is just another aspect of the rigged market.

The ECB, as far as I can see, has not spent anything supporting the euro and has spent 16.5 bn euro so far buying PIGS bonds. Simply by positioning themselves as buyer of last resort, they have ensured that there will not be an illiquid market. The bailout fund will act at the other end and ensure that Greek bonds are redeemed at face value. This will allow a normal yield to maturity calculation, I guess. For the moment anyway!

Ah, BAFIN have done something a bit more interesting that just banning naked short selling: … lling-ban/

Naked short selling is illegal
and should be banned

short selling ain’t. It actually prvides liquidity.

all this banning does is createsuncertainty in the short term hence the increase in volatility and the falling of prices
sell ask questions ltr is what happened

“Naked short selling” happens in shops all over the country every single day. Do you want to make that illegal too?

Take the following example. You go into Dixons and ask to buy a Sony 42" TV, and that you want to receive delivery of the TV on Thursday. Now Dixon’s don’t have it in stock, and they don’t have it in their own warehouse. But they know that they can almost certainly find the TV from their suppliers in time for the delivery. You don’t care what goes on behind the scenes because you are going to get your TV on Thursday, so you agree to the transaction. In effect Dixons have naked short sold the TV to you. But wait, I hear you say… what if Dixons failed to deliver the TV to you on Thursday as promised? Well in the financial world they would be subject to huge penalties - sometimes even 60% of the total transaction price.

Does anyone think that it should be made illegal for Dixons to do this? If the buyer required the delivery of the TV on Thursday then he would have to go to an alternative shop who has it in stock - and pay a higher price. This is the result of making naked short selling illegal.

Ok Emigrant but I was talking stocks. Obviously outside of that there is other uses.

Short selling u have stock or can locate it. Legal

naked short selling it is considered an illegal practice cos shares not located etc and ftd is evoked as u said.

For me the term naked and ftd failure to deliver is key

but both Practices offer key liquidity to mkts when used and not abused.

give a guy a chance to reply hquain, making a guy look like a right fxxxing arsE
takes forever on the mobile cursing things.ahh Fxxx this shit doing my head in … elling.pdf

dug this up for others on the thread

the only reason it should be banned is cos it is being abusEd and is generally seen as being illegal
nite lads

First off - failure to deliver should be punished, definitely. And short-sellers (naked or not) have had their ass handed to them over the last year.
Second off - what are the German’s playing at, they bring to mind the Mark Twain quote:

Thirdly -

You what? The ECB hasn’t supported the Euro for one nanosecond, on the other hand the Swiss Central Bank… check out a chart of the EUR/CHF, it is hilarious and our Swiss friends are now VERY, VERY long the Euro!

What specific part of the analogy fails when we are talking about stocks?

I think you accidentally hit on the real problem: the terms sound scary. But once you understand what is going on then there is no reason to be afraid of naked short selling. If “Naked Short Selling” was called something less scary like “Cost effective promises to deliver” then I doubt that anyone would want to make it illegal.

Failing to deliver is the real thing that should be made illegal - but it already is.

Naked short selling can be abused and cause share prices to fall. But long term investors should be delighted if someone has artificially reduced the price of the stock, allowing them to buy the shares at a cheaper price. Modern day investors’ mindsets have been completely corrupted by the belief that low stock prices are bad. But they are only bad if you are selling stocks.

The irony of this whole thing is that you don’t want to be buying any stock where the hedge funds are failing to deliver to you. FTDs are Wallstreet’s way of telling you that the company is grossly overpriced.

lads ye’re getting caught up in technicals here and missing the big picture

whatever that is…

there must be something going on. period. we’ll find out soon. Germans pull this and the arse is falling out of the Euro. 1 trillion of liquidity pledged and what happens to greek spreads? they widen

dont know if they have it sussed at LATOC but they’re making a stab at least

Maybe something to do with the US congress passing a resolution banning our sending the 56% share of the IMF bazooka?

Its the abuse that’s the problem. Short selling is doing exactly as you say but within the rules

okay naked has dufferent rules and terms but it’s the abuse of this that’s the problem

Again we are back to trust and regulation.we have had numerous instances of this BEng abused and a problem

so in terms of debate if the naked short strategy was workng properly not abused in a confident well regulated Market then hands off naked is not a problem.

Like I said it provides liquidity.

The angle I was coming from was cos of the abuse it should be banned

no documentation or lack of it has being proven to be the case in the fnancial mkts for bricks and mortar. Ditto for naked shorting and that needs to be sorted

have to run

The 10 Finance institutions that Angela Merkel Thinks Need Special Protection From Speculators → … ing-2010-5

Aareal Bank AG
Allianz SE
Commerzbank SG
Deutsche Bank AG
Deutsche Börse AG
Deutsche Postbank AG
Generali Deutschland Holding AG
Hannover Rūckversicherung AG (Hannover Re)
Mūnchener Rūckversicherungs-Gesellschaft AG (Munich Re)

The 25 Financial Institutions Most Likely To Default → The 25 Financial Institutions Most Likely to Default

25: Assured Guaranty Corp
24: Caja de Ahorros de Valencia, Castellon y Alicante
23: DEPFA Bank Plc
22: EFG Eurobank Ergasias S.A.
21: Caja de Ahorros del Mediterraneo
20: American General Finance Corp.
19: Residential Capital, LLC
18: Kazkommertsbank JSC
17: Piraeus Bank S.A
16: Agile Property Holdings Limited
15: Shimao Property Holdings Limited
14: Radian Group Inc
13: Realogy Corporation (Century 21 & Coldwell Banker)
12: The PMI Group Inc
11: Russian Standard Bank
10: Alpha Bank A.E.
09: Hopson Development Holdings Limited
08: National Bank of Greece S.A.
07: Country Garden Holdings Company Limited
06: MBIA Inc.
05: Dubai Holding Commercial Operations Group LLC
04: iStar Financial Inc
03: Takefuji Corp
02: MBIA Insurance Corporation
01: AMBAC Financial Group Inc.

I can’t believe you expect us to fall for this.

This part of your ludicrous analogy fails: Hedge funds collude to pile on naked shorts on specific stocks. They create vastly more naked shorts than the entire outstanding stock float. They then brief their friends in the media in order to create noise and fear. This panics legitimate institutional investors who understand what’s going on and because they understand only too well, offload their holdings. Creditors looking at the company’s stock price become wary of lending to the company because “something must be wrong”. As the stocks collapse amid waves of naked short selling and institutional disposals, the naked shorts cover and bank their profits, unless the company goes under then they don’t even need to cover.

This practice was widely used during the attack on US banks in late 2008 and early 2009 but it has always been used by certain Wall Street operators to attack smaller companies.