Oh dear : FSA bans short-selling

[SandyDown]

Hector Sants, chief executive of the FSA, said:

"While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector."

http://www.fsa.gov.uk/pages/Library/...2008/102.shtml

[AtW]

http://www.fsa.gov.uk/pages/Library/...2008/102.shtml

And?

[AtW]

http://en.wikipedia.org/wiki/Financi...ices_Authority

Looks like FSA has nowhere near power of SEC. No wonder all dodgy IPOs from Russia and other places took place in London in the last few years rather than going to the USA. Apparently it's because the City is so fooking good and has nothing to do with lax regulation allowing criminals to launder their money in billions

[sasguru]

You just don't understand the market system, atw.
The market is meant to be efficient so shorting is, theoretically, a good way to punish inefficiency. Problem is the world isn't black and white like you autistic techies want it to be.
Consider the fact that the IBs have been effectively put out of business. With your communist mentality (which you can't shake off) you would have rules not to have them in the first place.
Yet the market has come to the same conclusion as you and has got rid of the worst of them.
Problem is human psychology comes into play and now perfectly Ok firms are being put under pressure. Knowing this enabled me to make a nice sum a few days ago.
Of course it's much more complex than this - and I can't explain after a few sherries.
All I can tell you is if you really want to understand economics, read Adam Smith, then learn some psychology and history.

[AtW]

You just don't understand the market system, atw.

FSA bans short selling - I was advocating this for a long time. Does it mean that they also (like supposedly me) don't understand basic economics? USA seems to be moving into the same direction too. I am sure they will also prosecute many directors of failed banks like they did with Enron.

[HairyArsedBloke]

So what part of "we still regard short-selling as a legitimate investment technique" backs you up?

What about the use of options, CFD's, single stock futures?

[AtW]

As I said - FSA is under huge influence by banks, all this boys club stuff, I do not consider them independent from then City or even acting in the interests of investors - they act in the interests of the City itself which is easily proven by short selling disallowed only for financial organisations.

What about the use of options, CFD's, single stock futures?

I am okay with options/futures. I am not okay with people borrowing somebody else's shares in order to dump them on market to push price down so that the person who manipulates the market makes money and the poor sucker whose shares were borrowed for it loses out in loss of value. I'd say anyone who does this with any serious share volumes is attempting to manipulate the market - they should go to jail for it even if they use their own shares that they want to buy back later when price is down.

[BigTime]

I am not okay with people borrowing somebody else's shares in order to dump them on market to push price down so that the person who manipulates the market makes money and the poor sucker whose shares were borrowed for it loses out in loss of value. I'd say anyone who does this with any serious share volumes is attempting to manipulate the market - they should go to jail for it even if they use their own shares that they want to buy back later when price is down.

The reason they lend the shares is they make a few quid out of it and they are holding because they believe they are worth it. They are not concerned with a little volatility in the price as ultimately their correct value will be restored based on a multiple of current and future earnings. Your anger is misplaced.

[AtW]

The reason they lend the shares is they make a few quid out of it

I don't actually think big players bother lending actual shares from anybody - they just play it hard to push price down and, if they get it, then make money from air - if not, they buy back shares and take losses only to recover them in some other successful raid.

My anger is not misplaced at all - it is one thing when some people get rich and buy flash cars using their annual bonuses, fine, not too bothered about that, but I am bothered when those guys put everyone at risk because they over-leveraged themselves and screw the tax payer and everyone because of their own greed - this is something they should go to jail for pretty quickly.

Short sellers is just one part of the problem - banning them is not solving it all, but it's a good start. I don't hold my breath for strong UK action though - the Govt is deep involved with dodgy operations in the City whose unique selling point is lax regulation that allowed all sort of dodgy crap to go on - that's why the City was so attractive, not because of some supposed "talent".

[AtW]

http://www.guardian.co.uk/business/2...g.creditcrunch

"Big City investors supported the FSA's move. Guy de Blonay, a hedge fund manager at New Star, said: "To bring a sick company to its knees is one thing, but to destroy healthy companies for a quick buck is another. And I'm a hedge fund manager myself and it will have an impact on what I do. But I can see the national interest and the ramifications for the wider economy.""

So he thinks its okay to kick someone who is down, like drive over sick puppy that broke its leg, but it's another thing (more profitable no doubt) to drive over the healthy puppy - this way it's worth a lot less to the owner so he can make more money (allegedly)

It's crazy how some pensioner who refuses to pay council tax would go to prison while those guys are stealing billions and get away with it. No wonder the world is in crisis.