Ban on Short-Selling - short sellers squashed

Worldwide market regulators have banned short selling, which has fired up all the markets. Prominent among them - Shangai composite up 10%, Russian index up 20%, European markets are up anywhere between 7 to 8%. Asian Indices and European Indices
It is green everywhere

Businessweek: SEC Ponders Temporary Ban on Short-Selling

The Securities & Exchange Commission was said to be planning a temporary outright ban on the practice late Sept. 18, following a similar move by British regulators for financial stocks—securities experts and former SEC officials are urging caution.

Short-sellers attempt to profit from falling share prices by borrowing stock, selling it at the current price, then returning the shares to the lender after the price has dropped and the cost of replacing the shares has fallen. A growing chorus of lawmakers and regulators in the U.S. and overseas say abusive short-sellers are spreading false rumors or selling shares they haven't actually borrowed as part of an effort to force share prices down artificially.

Forbes : Short Sellers Get Squashed
The Securities and Exchange Commission, acting in concert with Britain's Financial Services Authority, said Friday that it was temporarily banning the short-selling of financial stocks. The order applies to 799 U.S.-listed shares and 29 London-listed shares and is effective immediately. The ban ends on Oct. 2 for American shares and on Jan 16, 2009, in the U.K.

ADVN: Shanghai Composite Index opens up 9.06 pct; banking sector up 10 pct

The benchmark Shanghai Composite Index opened up over 9
pct after regulators said they will cancel the stamp duty on share purchases,
and as China's sovereign wealth fund announced plans to buy shares in
state-owned banks, dealers said.
They key index was up 171.81 points or 9.06 pct at 2,067.64, with all banks
rising by the 10 pct daily limit.

FOX news: Russia's Stock Exchange Up 20%

Trading earlier Friday was suspended on both the RTS and MICEX within an hour of opening, in line with exchange rules. They reopened after an hour.

MICEX, where most share trading takes place, is up 26.3 percent since the start Friday following a two-day suspension. The RTS is up 20 percent.
Posted in  on September 19, 2008 by  |