Shorting forbidden?

But if shorting is now banned, the propensity of the underlying market price to fall is now reduced, and so my taking a short position with a spread bet company is a less attractive proposition for me?
 
Hmm, I'm not sure on this one. What if all the clients go short, The SB firm can't hedge or will they use options?

Also, if you look at IG and CMC's asian share offerings, there are a few were companies that don't allow shorting by the Asian authorities so IG and CMC don't allow shorting. Guess we'll find out shortly...
 
Looks like it applies to 'financial stocks' at present so taken literally this would not mean the whole market.
For those sectors affected will we be seeing a run on 'short closures' tomorrow given the new disclosure rules combined with no new shorting positions opening??
LONG might be the order of the day tomorrow for FTSE and other affected sectors/stocks?
 
This is just to stop another run on any other UK bank. It wont stop falling prices at all because prices fall due to lack of buying support.


Paul
 
Trader333 said:
This is just to stop another run on any other UK bank. It wont stop falling prices at all because prices fall due to lack of buying support.
Click to expand...

Well, yes, although excuse my ignorance on these matters but won't it mean people say the bid/offer price is 100/101... oh, nobody interested? 99/100? anyone? ok 85/86? 63/64? Nobody? 55/56? Please? etc and so the price falls? Maybe that isn't how it works. :eek:
 
shadowninja said:
Well, yes, although excuse my ignorance on these matters but won't it mean people say the bid/offer price is 100/101... oh, nobody interested? 99/100? anyone? ok 85/86? 63/64? Nobody? 55/56? Please? etc and so the price falls? Maybe that isn't how it works. :eek:
Click to expand...

That's my understanding as well, though most of the press seem to believe otherwise - maybe we should rethink?
 
From IG Index:

Restrictions on Short Selling
In light of Thursday's FSA statement on short positions in financial stocks, we will be taking necessary steps to prevent short selling of new positions in UK stocks governed by the FSA.

A list of securities affected by this change is expected to be published by the FSA prior to the London Stock Exchange opening on Friday 19 September 2008. Any outstanding orders to sell these securities will be cancelled in accordance with this directive.

Please check here for further updates.

:rolleyes:
 
Interesting.

Without shorts & covering, can we expect the markets to not go through so many strong retracements as people won't be buying to cover their shorts ?

Just a thought.
 
Another classic example of government inference in the suppose-to-be free market. Band-aid fix on a long term problem.
 
pedro01 said:
Interesting.

Without shorts & covering, can we expect the markets to not go through so many strong retracements as people won't be buying to cover their shorts ?

Just a thought.
Click to expand...

Yes.. will be interesting to see whether FTSE falls from the edge of the cliff now...

What a stupid move by the morons!!
 
It will kill liquidity and probably cause a bigger fall in prices as a result of no-one wanting to risk being only able to Buy in my view.


Paul
 
Trader333 said:
It will kill liquidity and probably cause a bigger fall in prices as a result of no-one wanting to risk being only able to Buy in my view.


Paul
Click to expand...


I doubt it. My opinion is that it is the smart people who are buying banks knowing that the unsuspecting and stupid public will be attracted by the rising prices and start participating as well. I would be amazed if prices don't keep rising for a while. When the smart money can't attract anymore stupid people who listened to the advice of their friends and family they will start selling, causing a panic and a crash. No different to the dot.com boom when everyone...and I mean everyone became a stock market expert :rolleyes:
 
So no one, here, thinks that speculative shorting can bring a company to its knees? I can't see how the government could have done anything else. It is not the US, it can't go bailing everyone out so, if it believes that shorting financials is dangerous, then it is not doing its duty if it does not introduce restrictions.

The NYSE , as far as I can remember, suspended trading if there is a danger of a crash. What's so different?

I've always, like everyone here, shorted shares and indices when I wanted but I can see a national crisis in the offing, here, and if I have to be checked, so be it.

Split
 
Splitlink said:
So no one, here, thinks that speculative shorting can bring a company to its knees? I can't see how the government could have done anything else. It is not the US, it can't go bailing everyone out so, if it believes that shorting financials is dangerous, then it is not doing its duty if it does not introduce restrictions.

The NYSE , as far as I can remember, suspended trading if there is a danger of a crash. What's so different?

I've always, like everyone here, shorted shares and indices when I wanted but I can see a national crisis in the offing, here, and if I have to be checked, so be it.

Split
Click to expand...

Why only financials? Why not put a ban on people selling their houses below a certain price so they can save the property market?
 
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