Short selling banned in UK

So those wicked speculators have been fixed ??? See FSA statement on short positions in financial stocks

I suppose George Soros will now have to open a demo account at Capital Spreads

Why oh! why, do the politicians and authorities never address the real problems?

well I for one think it's about time, here's hoping the big shorters take a fatal loss. grrr .. steal my pension will you ... destroy my bank will you ..

how will this affect spread betters? .. will I still be able to short/long cable? serious question!

According to the BBC, short interest in HBOS hasn't increased over the last few weeks, which would imply short sellers weren't responsible for the drop - can anyone confirm? Actually, can anyone tell me where to find out short interest in companies?

Also worth noting that Darling was quoted as saying that HBOS has been in trouble for weeks - though obviously evil speculators makes a better Daily Mail front page...

fifty2aces said:

According to the BBC, short interest in HBOS hasn't increased over the last few weeks, which would imply short sellers weren't responsible for the drop - can anyone confirm? Actually, can anyone tell me where to find out short interest in companies?

Also worth noting that Darling was quoted as saying that HBOS has been in trouble for weeks - though obviously evil speculators makes a better Daily Mail front page...

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The big naked short sellers are causing a problem of extreme volatility . it's those big beast we need to castrate .. and no that's not a metaphor

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.

In addition, the FSA will require from Tuesday 23 September daily disclosure of all net short positions in excess of 0.25 per cent of the ordinary share capital of the relevant companies held at market close on the previous working day. Disclosure of such positions held at close on Friday 19 September will also be required on Tuesday 23 September.

The FSA stands ready to extend this approach to other sectors if it judges it to be necessary.

These provisions will remain in force until 16 January 2009, although they will be reviewed after 30 days. A comprehensive review of the rules on short selling will be published in January.

Hector Sants, chief executive of the FSA, said:

"While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector."
The detailed changes to the Code of Market Conduct, and a schedule of the companies whose securities are covered by them, will be published before the market opens tomorrow (Friday 19 September).

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

Don't believe the propoganda you're all reading and hearing. Most if not al of these commentators have no real knowledge of what they're talking about. This is why they're trying to blame someone and the shorts are always the obvious target.

The short sellers didn't destroy anything, the banks in question did all the hard work themselves. Shorts are good for the market, they add liquidity and keep people and companies on their toes.

Anyway, short selling can never be banned. Yes, they might band the practice but you think this is going to stop people making money if stocks fall? No way, they'll just find a way around the problem so the revenue stream doesn't die.

Again, you're all being fed propoganda which in times like this feeds off itself until everyone pretty much believes it. Well I don't

shortorlong said:

The big naked short sellers are causing a problem of extreme volatility . it's those big beast we need to castrate .. and no that's not a metaphor

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Given the huge trades going through, and the reasonably low short interest, I reckon it's desperate selling by longs, rather than desperate selling by shorts.

fifty2aces said:

Given the huge trades going through, and the reasonably low short interest, I reckon it's desperate selling by longs, rather than desperate selling by shorts.

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since what time exactly? .. where's your info coming from? .. have the shorts dried up since the announcement? .. anyway I guess we will find out what the effect of this ban will be.. if the market stabilises and no-more banks are hunted to extinction .. then we can surmise that the big shorters were causing a problem, if the market bombs and kills banks then we can say that .. well ..big naked shorters were not to blame [magnifying the problems out of all reason] .. come back all is forgiven

yes to naked short selling
no to legitimate short selling

Haven't the F***in Stupid A***holes seen the Shanghai SE?

These idiots need to force the bank$ to write down all assets to marketable value to rebuild trust and confidence in the system.

fibonelli said:

yes to naked short selling
no to legitimate short selling

Haven't the F***in Stupid A***holes seen the Shanghai SE?

These idiots need to force the bank$ to write down all assets to marketable value to rebuild trust and confidence in the system.

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Hi fib, what's happening in Shanghai?

So what do people expect to be covered by this? Will buying puts be ok? Selling calls? If neither, then surely no options trades can happen - someone has to go short for every long.

If I short FTSE 100 futures, and buy a basket of all the non-financial shares, would this count? It's basically a synthetic short.

Obviously the FSA are yet to clarify, I'm just speculating - does that make me an evil specualtor?

Excuse my ignorance on such matters but won't they just create financial products such as GBP/BARC or GBP/HBOS so people can go long on these "pairs"?

shadowninja said:

Excuse my ignorance on such matters but won't they just create financial products such as GBP/BARC or GBP/HBOS so people can go long on these "pairs"?

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Well, currently the rule is "to prohibit the active creation or increase of net short positions in publicly quoted financial companies". The meaning of this is unclear - it might mean no short exposure at all (unlikely), which would prevent what you suggested from happening, as well as stopping option trading. And remember that who ever is creating/selling these products will need to hedge their exposure, which could be difficult if they can't short stock or buy puts.

FSA statement on short positions in financial stocks

shortorlong said:

Hi fib, what's happening in Shanghai?

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Hi SoL,

Re: Banning short selling

Article including a section on the Shanghai SE
"............China bans short selling outright. But the practice is allowed, with limitations, in most other major Asian markets..........".
Asia unlikely to follow U.S. short-selling crackdown | Special Coverage | Reuters

Article about the Karachi SE
South Asia Investor Review: Karachi Stocks Rally after Ban on Short Selling

Once you've read the articles, pull up a price chart!

hmmm I think this means any one who goes long tomorrow morning might do quite well..... what u reckon?

Bottom pickers get smelly fingers.

SEC to ban all (?) short selling till jan ?

SEC Plans to Temporarily Ban Short-Selling - Markets * US * News * Story - CNBC.com

ES, NQ going crazy. Lock limit up overnight perhaps ?

Short selling is not the problem or the main reason for sharp drop in shares prices. Yes hedge funds are taking advantage of it however they are not the cause. There are strong underlying fundamental issues causing business models to become broken, lack and/or cost of credit, asset writedowns, consumer slump. This is the market naturally filtering out the excesses which have been accumulated since the liquidity boom which started in 2001 ending August 2007. Like Jim Roger says, its important to let the market do its thing and not to try and artifically stop it, like a forest that catches on fire and burns to the ground, only to create a more fertile ground for new growth.

stocktrader77 said:

Short selling is not the problem or the main reason for sharp drop in shares prices. Yes hedge funds are taking advantage of it however they are not the cause. There are strong underlying fundamental issues causing business models to become broken, lack and/or cost of credit, asset writedowns, consumer slump. This is the market naturally filtering out the excesses which have been accumulated since the liquidity boom which started in 2001 ending August 2007. Like Jim Roger says, its important to let the market do its thing and not to try and artifically stop it, like a forest that catches on fire and burns to the ground, only to create a more fertile ground for new growth.

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Yes, shorts are not the reason equity markets go down. But saying that is not the same as having some sort of free market religion. The current credit crises really smacks of a lack of appropriate regulation and transparency going on for years.

More practically, the point is to try to understand what effect a ban on short selling will have on the equity markets in the near future.

Does this effect the Indices? Can I still short the FTSE 100? I only spreadbet but got a message from IG stating they would be adhering to this legislation.