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JohnDenver
Light Sweet Crude
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Joined: Aug 29, 2004
Posts: 1888
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 Posted: Sat Sep 27, 2008 7:41 pm Post subject: Brown: Shorting Ban May be Permanent |
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| Quote: | Speaking at the Labour Party conference, Gordon Brown signalled that at least some elements of the crack-down on short-selling imposed by the Financial Services Authority last week would continue.
Meanwhile, the FSA said it might name and shame and even fine – hedge funds which do not disclose short positions in banks. The move came after Eton Park, a hedge fund set up by former Goldman Sachs bankers, yesterday announced to the stock exchange its short position in HSBC was 0.28pc. The hedge fund also disclosed the position on Tuesday.
The FSA attempted to stop the battering of banks' shares on Thursday by banning new short selling in financial stocks and forcing investors to disclose existing positions by Tuesday.
Mr Brown defended the ban, saying "when a group of people are exploiting a difficult economic situation, it is right to stop it." |
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Captain_Meh
Heavy Crude
Joined: Jun 09, 2008
Posts: 109
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| Posted: Sat Sep 27, 2008 9:34 pm Post subject: Re: Brown: Shorting Ban May be Permanent |
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I'm not a fan of a shorting ban, provided that these instruments are used to hedge risk, rather than to speculate.
Therefore, I'd rather place some kind of limits on the amount of leverage a firm can assume. |
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smallpoxgirl
Moderator
Joined: Nov 08, 2004
Posts: 6486
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| Posted: Sat Sep 27, 2008 10:25 pm Post subject: Re: Brown: Shorting Ban May be Permanent |
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| Captain_Meh wrote: | | Therefore, I'd rather place some kind of limits on the amount of leverage a firm can assume. |
That limit has existed since about 1930. Stock buyers and short sellers are limited to 2 to 1 leverage.
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"We were standing on the edges
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Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS |
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JBinKC
Heavy Crude
Joined: Aug 14, 2004
Posts: 252
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| Posted: Sat Sep 27, 2008 10:58 pm Post subject: Re: Brown: Shorting Ban May be Permanent |
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| Captain_Meh wrote: | I'm not a fan of a shorting ban, provided that these instruments are used to hedge risk, rather than to speculate.
Therefore, I'd rather place some kind of limits on the amount of leverage a firm can assume. |
The problem is the way it is currently done as enforced is illegal. If you take a classic case of when you are supposed to short sell a stock it is reserved for a stock that is purchased on margin but many short sales are done with any shares held in the streetname and in some cases have even violated the share's float. Blogs like deep capture has exposed this fraud in a major way.
Stocks should never be on the reg sho list and if they are shareholders should have right to sue specialists, market makers and brokerages. |
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TheDude
Expert
Joined: Apr 06, 2006
Posts: 3626
Location: 3 miles NW of Champoeg, Republic of Cascadia
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| Posted: Sat Sep 27, 2008 11:12 pm Post subject: Re: Brown: Shorting Ban May be Permanent |
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Things are looking good for my water car IPO. 
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yesplease
Fission
Joined: Oct 03, 2006
Posts: 2570
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| Posted: Sun Sep 28, 2008 3:58 am Post subject: Re: Brown: Shorting Ban May be Permanent |
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Where does the link say it may be permanent?
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Captain_Meh
Heavy Crude
Joined: Jun 09, 2008
Posts: 109
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| Posted: Sun Sep 28, 2008 9:11 am Post subject: Re: Brown: Shorting Ban May be Permanent |
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| smallpoxgirl wrote: | | That limit has existed since about 1930. Stock buyers and short sellers are limited to 2 to 1 leverage. |
I mean in ALL assets, across all markets. The investment banks that have gone belly-up were leveraged on the order of 30-1. At a minimum, Fannie and Freddie were operating at 60-1. |
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smallpoxgirl
Moderator
Joined: Nov 08, 2004
Posts: 6486
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| Posted: Sun Sep 28, 2008 10:06 am Post subject: Re: Brown: Shorting Ban May be Permanent |
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| Captain_Meh wrote: | | I mean in ALL assets, across all markets. The investment banks that have gone belly-up were leveraged on the order of 30-1. At a minimum, Fannie and Freddie were operating at 60-1. |
Hmm...so you're suggesting bankers and other rich people be required to actually follow the law? It's a novel idea, but I don't see how it would ever work.
_________________
"We were standing on the edges
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS |
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Captain_Meh
Heavy Crude
Joined: Jun 09, 2008
Posts: 109
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| Posted: Sun Sep 28, 2008 10:21 am Post subject: Re: Brown: Shorting Ban May be Permanent |
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| smallpoxgirl wrote: | | Hmm...so you're suggesting bankers and other rich people be required to actually follow the law? It's a novel idea, but I don't see how it would ever work. |
Spare me the strawman. I'm proposing that strict limits be defined and enforced wrt the leverage that firms can use. I'm also proposing legitimate underwriting standards for credit default swaps and similar instruments. |
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