US SEC STAFF RECOMMEND EXEMPTION FOR MARKET MAKERS IN DERIVATIVE(BY SHORTING ORDER)

Reuters ^ | 09/20/08

[TigerLikesRooster]

Reuters - Saturday, September 20

US SEC STAFF RECOMMEND EXEMPTION FOR MARKET MAKERS IN DERIVATIVES COVERED BY SHORTING ORDER

[TigerLikesRooster]

So big boys can still short the market because they provide vital liquidity to the market?

[TigerLikesRooster]

Ping!

[roaddog727]

Such crap.

SO I can’t short the market? No, no, no, no, no.

All or none.

[TigerLikesRooster]

Some background on this proposal:

http://www.nypost.com/seven/09202008/business/short_shrift__critics_129946.htm

SHORT SHRIFT: CRITICS

BLAST SEC TRADING BAN

By KAJA WHITEHOUSE

Posted: 3:26 am September 20, 2008

The Securities and Exchange Commission's temporary ban on short-selling took down the good with the bad.

Several groups yesterday said they took a beating as a result of the ban, which forbids short-selling of 799 financial stocks. Among those sideswiped by the ban were hedge funds and traders who legally shorted financial stocks, as well as businesses that deal in so-called stock options, that saw trading dry up yesterday as a result of the SEC rule.

Prices were so out of control yesterday that the major stock exchanges, including the New York Stock Exchange, were forced to cancel trades for dozens of stocks conducted in the first hour of trading.

Brokerage firms were also “busting” trades that rose so high they caused an uproar from angry customers, people said.

“We protected the big bankers in New York, but the retail investor is once again bearing the brunt of it,” said Peter Bottini, head of trading and customer service for online brokerage firm optionsXpress.

Stocks rallied yesterday, but beneath the euphoria of the government's ban and plans to purge banks of toxic mortgage holdings was a good degree of panic from people who say they were martyred to prop up big Wall Street firms.

The ban also pushed aside a key group, known as market makers, that normally provide liquidity to the market by stepping in when a buyer can't find a seller or vice versa.

Also pulling out of trading in financial stocks were people who trade using complex computer models. These traders, which include big hedge funds like AQR and Jim Simon's Renaissance Technologies, normally provide liquidity through rapid-fire trading.

[Need4Truth]

Just wait until the government decides it needs the money in your IRA or 401K. Does anyone doubt, now, that they would go after it?

[Mark was here]

Just wait until the government decides it needs the money in your IRA or 401K. Does anyone doubt, now, that they would go after it?

They already grabbed a chunk of it by devaluing the Dollar by creating the "bail out" money out of thin air.

[bt-99]

If they can't short stock, they can't buy calls or short puts. This means the liquidity disappears and there is market failure. What this rule does is effectively,or actually, put people out of business(and i don't mean temporarily). Government at work.
There have always been rules about naked shorting but they stopped enforcing them. This is what causes problems. Monster hedge funds banging bids and spreading rumors. They did away with the short sale uptick rule because they said it was not needed, Bull.

[Travis McGee]

One set of rules for the masters (”Too Big To Fail”) and one set of rules for the peasants.

[dfwgator]

I think now is a good time to invest in companies that make torches and pitchforks.

[Travis McGee]

Too close range for me. I’d buy ammo.

[supercat]

There have always been rules about naked shorting but they stopped enforcing them.

Did the rules require that people who shorted stocks provide proof that they acquired shares prior to shorting them (and not just within three days)?

[TomasUSMC]

normally provide liquidity through rapid-fire trading.

Why does rapid-fire trading NOT sound like a good idea?