Government bans short selling from midnight ??

cheerfulcat

tradetime wrote: »

for those who hold a short position the risk is unlimited as the position can go up without limit.

Quite! Which is why I'm assuming that anyone going short legitimately is targeting a company which is looking shaky for some reason - someone who buys shares surely expects them ( eventually, at least ) to go up. Presumably someone who sells them, whether they own them or not, must expect the price to go down...FWIW I think that this is an attempt to blame shorters for the wider problems in financial markets.

[Deleted User]

tradetime wrote: »

Naked shorting is, and has always been illegal in the US, it's just that they have been very lax about enforcing it up until now.

Only illegal for US traders, however I believe traders from other country's have a 4 day window in which they can use to legally manipulate the price of US stocks by leading the sell curve. Lots of small company's have been taken over by larger ones for less then 1/10th of their true value due to this practice. Also ;ots of US companies simply dont get caught or get small fines.

The stock market is the only place where you are allowed to take 100 quid for a tenner and not be locked up in prison.

:beer:

In the UK its a free for all, if there was a company with 10 million stocks listed its possible for a company to come along and sell 100 million virtual stocks bending the supply/demand curve so much that it wont recover. This happens with small companies all the time, one managing director listed his company for 100 million retired, then bought it back after it had crashed to around 6 million the declaration of interests sheet showed that 2 or 3 brokers had sold it 10 times over.

Its a big problem, esp if a companys growing and doesnt pay divis, easily destroyed.

esbo

The term 'short selling' is just a term to disguise the trading of stolen stock.
Short sellers should be treated lilke the theives they are and jailed.

tradetime

Yant1 wrote: »

Only illegal for US traders, however I believe traders from other country's have a 4 day window in which they can use to legally manipulate the price of US stocks by leading the sell curve.

Strictly speaking everybody has a 3 business day window, it is referred to as settlement, transactions have 3 business days to settle, at which point the money will be transferred from the buyer to the seller and the stock will be delivered from the seller to the buyer.

Fella

Excellent development IMO.

I wonder If Lloyds insisted on this as part of the deal with them taking over HBOS. I would have in their position.

Stompa

mw2655 wrote: »

does anybody know what his means for blackrock's UK absolute alpha fund?

http://www.blackrock.co.uk/IndividualInvestors/MarketView/MarketViews/UKCommentary/index.htm

Impact on BlackRock UK Absolute Alpha Fund

Effective midnight on 18 September 2008, the UK Financial Services Authority (FSA) introduced new temporary rules prohibiting the creation of new short positions or the increase of existing short positions in a list of 29 UK quoted Financial companies. We are in the process of clarifying certain issues of interpretation in relation to the FSA’s statement. We may update this commentary in the light of such clarification.

It appears that these rules will affect, in the short term, the ability of the BlackRock UK Absolute Alpha Fund to create new synthetic short positions in these stocks. The Fund will, however, continue to be able to invest in a wide range of UK equities and cash, and to create synthetic short positions in any stock not on the FSA list.

Mark Lyttleton and Nick Osborne, Fund Managers of the BlackRock UK Absolute Alpha Fund said: "In the short term, there may be some restriction on our ability to create new synthetic short positions in certain stocks. However, we note that the FSA has confirmed that they view short selling as a legitimate financial technique. We believe that there will be no significant impact on the long term ability of the Fund to achieve its investment objective."

Please see the attached link to the Factsheet for the BlackRock UK Absolute Alpha Fund as at 31 August 2008, which shows that the Fund had a slight net long position in the broad Financial sector.

poppy10_2

esbo wrote: »

The term 'short selling' is just a term to disguise the trading of stolen stock.
Short sellers should be treated lilke the theives they are and jailed.

You clearly don't understand short selling at all.

competitionscafe

Why is Alliance Trust on the banned list? It's a large general investment trust - not a bank!
http://www.fsa.gov.uk/pubs/handbook/list_instrument200850.pdf

sabretoothtigger

Do they hold mortgage securities

esbo

And now the question that none of you can answer.

Who holding HBOS stock would have lent it to someone else, knowing that by doing so they were making themselves poorer?

1 pound of potatos to the correct and answer, I bet nobody can guess.
You ain't clever enough.