Government bans short selling from midnight ??

Primrose

I think I just overheard somebody saying that the Government has banned short selling from midnight tonight. Is this correct? Can't find any reference to it. If so, it will hopefully put an end to the practice has almost bought the downfall of the Western banking system and caused ruin to lots of individuals' personal savings, investments and pension plans. But unless the practice is adopted worldwide, surely the devious will find a way around it on other stock exchanges. I believe the practice has already been banned in the US?

Trollfever

The Board of the Financial Services Authority (FSA) today (Thursday 18 September) agreed to introduce new provisions to the Code of Market Conduct to prohibit the active creation or increase of net short positions in publicly quoted financial companies from midnight tonight.

http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/102.shtml

tradetime

LOL, yes the government has decided that you should only be allowed to hold the opinion that stocks should go up. :rotfl::rotfl::rotfl::rotfl:

opinions4u

This raises a key question:

Why did they not do this after the HBOS short selling scandal in March?

If they could have done and chose not to, they have just caused an anti-competitive merger on an extraordinary scale.

Somebody should have their head spiked on Tower Bridge for this.

tradetime

Primrose wrote: »

If so, it will hopefully put an end to the practice has almost bought the downfall of the Western banking system and caused ruin to lots of individuals' personal savings, investments and pension plans. But unless the practice is adopted worldwide, surely the devious will find a way around it on other stock exchanges. I believe the practice has already been banned in the US?

Ah yes, those evil short sellers making the market go down nuk nuk nuk.

purch

The Short Sellers would have got their fingers burnt big time if there wasn't something 'rotten' with the stock they were shorting....they can't borrow that much stock to sell !!!!!

They just exposed what the Banks didn't want anyone to know !!!

tradetime

purch wrote: »

The Short Sellers would have got their fingers burnt big time if there wasn't something 'rotten' with the stock they were shorting....they can't borrow that much stock to sell !!!!!

They just exposed what the Banks didn't want anyone to know !!!

Exactly, whilst I wouldn't say no-one gets up to anything underhand, the majority of short selling is totally above board, the only caveat I have is with naked short selling.

esbo

I think the truth is that no 'short selling' took place, it is just a rumour spread to give the idea that the shares are being forced low artifically to stop other people selling thier holdings, when the reality is that the stock is deep in the dodos

DocMartin

Does this mean that any existing deals will be honoured or will some short-sellers be caught with their shorts well and truly down?

esbo

purch wrote: »

The Short Sellers would have got their fingers burnt big time if there wasn't something 'rotten' with the stock they were shorting....they can't borrow that much stock to sell !!!!!

They just exposed what the Banks didn't want anyone to know !!!

And who exactly would be lending the sellers the stock in the first place?
Nobody in their right mind obviously?
Or someone (brokers) committing fraud.

Futhermore most of HBOS stock is held in their own system.

cheerfulcat

Hi Primrose,

Your question about the ban has been answered but I just wanted to pick you up here -

Primrose wrote: »

If so, it will hopefully put an end to the practice has almost bought the downfall of the Western banking system and caused ruin to lots of individuals' personal savings, investments and pension plans.

It is not short-selling which has caused the current crisis - that was a combination of too-low interest rates, lax regulation, unwise borrowing and lending and greed on the part of almost every market participant, up to and including the " ninja " borrowers. The short-selling may have hastened the downfall of various financial institutions but imo it would be very foolhardy indeed to short a healthy company.

I believe the practice has already been banned in the US?

I'm fairly sure it's only naked shorting which has been banned in the States.