[JohnDenver]

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."

Link

[Captain_Meh]

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.

[smallpoxgirl]

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.

[JBinKC]

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.

[TheDude]

Things are looking good for my water car IPO.

[yesplease]

Where does the link say it may be permanent?

[Captain_Meh]

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.

[smallpoxgirl]

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.

[Captain_Meh]

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.