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all short selling stopped by ASIC

Discussion in 'Shares' started by voigtstr, 21st Sep, 2008.

  1. voigtstr

    voigtstr Well-Known Member

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    Just announced on ABC news, ASIC will review their decision in 30 days. Their belief is that short selling is destablising the market.

    Hows that going to effect some of the traders on this site?
     
  2. lorrimer

    lorrimer Well-Known Member

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    This is long overdue. I'd be happy to see it made permanent.
    It's been obvious for months that some of our financial institutions have been targeted
    Anyone who was going to sell their stock would have done so a long time ago.
    Therefore the continued downward spiral has to be attributed to short sellers borrowing stock to sell short.
    In this day and age it is far too easy to start negative rumours and spread fear.
    Short sellers will always have the upper hand in this regard as human nature is such that we are always far more fearful of losing money than we are of not making money on the upside.
    It's time to get back to basics. If you like a company and think it's going to do well, then buy the stock. If you think the company in which you have invested is not going to do well in the future, then sell your stock, or if you didn't own stock in that company you're not going to buy it in the first instance.
    The stock market has become like a betting shop with many engineered products such as derivatives that the vast majority of people simply don't understand.
    I'm sure the USA wished at the moment that some of these investment vehicles had never been devised!
     
  3. austing

    austing Well-Known Member

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    Great news - the only good Hedge fund is one that has gone bust as far as I'm concerned. In recent years these leeches have become too many in number and too big in size. To them the markets is nothing more than a Casino.

    And bust may be the case for some as explained in the following extract from an article I was just reading:

    "There is every likelihood that a run on hedge funds will now take place as their investors realise they no longer have anything to offer that is different to long-only funds."

    Hopefully the regulators will also look into over the counter products such as CFDs next. There is certainly a strong push starting to build for this to happen as it has been suggested that this is another area which could cause a financial mess. These have been banned in the US from memory so given the current crisis it will be interesting to see what happens here.

    Cheers
     
  4. AsxBroker

    AsxBroker Well-Known Member

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    Hi Austini,

    That's an interesting quote from an article.

    Last week we had a professional development day and had a nice chap out from BT discussing one of their hedge funds.

    He explained that they much prefer to take positions in options or futures as it is cheaper to trade compared to ordinary stocks. With this in mind I don't think the hedge funds will suddenly struggle, if the regulator really wanted to crunch speculation they would have also included "put" contracts. The hedge funds usually also trade commodities (no regulation changes there) and foreign exchange (no regulation changes there either).

    All the regulators want to do is to reduce the current volatility as it is too much (remember the good old days where a move of 0.5% in a day was massive?).

    Once they believe the market has settled down they will allow short trading to resume due to "Mr D'Aloisio said there was a legitimate place for short selling in markets, such as to assist with price discovery, but a circuit breaker was needed to boost confidence." (ASIC in total ban on short selling | smh.com.au)

    The 4% daily movements we've had in the last few days is silly, first 4% down then 4% up and today is going to be up as well...

    Cheers,

    Dan
     
    Last edited by a moderator: 22nd Sep, 2008
  5. Temjin

    Temjin Active Member

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    This is utterly stupid and against free market!

    Banning naked short selling is perfectly fine as it has been illegal since day one, but completely banning all covered short selling???!! What the hell?? How long has short selling be available for in the stock market? Why we could short stocks back in the tech bust or any other "bear" market but we can't do it this time? You know why? Because financial insinuations are the only type of organisation that are at risk of suffering operationally if their share price goes down. Credit ratings agencies tend to downgrade them and counterparties who engage in trading with it will back away. This is all political motivated! You have financial institutions who made the wrong bet and now arguing that they are unfairly treated because their share prices are down which are not in line of their claimed good company "fundamentals". That's so b-----t! They've made the wrong bet, their balance sheet is essentially insolvent and they should just go bankrupt. Now they are acting like kids nagging their parents to forgive the mistakes they have made and start attacking the short sellers.

    Funny still, there was a research done by a brokerage firm showing that the amount of short selling on financial firms like Goldman Sach and Morgan Stanley has actually DECREASED since over the past few months. Even Goldman Sachs know about it, but they are still blaming them.

    This is going to bite them back over the long term for sure.

    And no, I have never done a short sell myself. I got ways to protect myself and/or profit from their demise.
     
  6. Billv

    Billv Getting there

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    I believe that this is a good move.
    We have to protect our financial institutions or we will face bigger problems.

    IMHO they should have done it 6 months ago when ABC learning was attacked.

    This is temporary measure anyway when things get back to normal I am sure they will allow short selling again.

    Cheers
     
  7. carlosreynolds

    carlosreynolds Active Member

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    Business Spectator - Known unknowns in today's trade

    Great article from the Business Spectator - you need may need to subscribe to read.

    "And what about the contracts for difference (CFD) market? This is where retail investors do their short selling.

    Some CFDs, but not all, are market-backed, which means the over-the-counter providers actually buy or sell (short) on the ASX whatever their clients trade on their CFD platforms. The other type of CFD and equity swap (the wholesale variety of CFDs) is simply a bet between two parties about whether a stock or an index will rise or fall.

    The size of each portion of the CFD market is unknown, as is the size of the CFD market overall.

    And then there are the ASX exchange-traded CFDs, launched just after the market peaked in November 2007. Is short selling of these banned as well? Will hedge funds simply move across to CFDs and equity swaps to do their shorting?

    In other words, can ASIC really ban short selling at all?"
     
  8. crc_error

    crc_error The Rule of 72

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    Market looks to set a 5% gain at open, but there must be some serious stuff going on with the ASX open delayed!

    FMG is up 18% and BHP 10% at pre-open.. all banks are also up..

    I this this is a good move.. if people want to short, they should do so on a separate market, like the options market..

    shorting just turns the market into a big casino.
     
  9. crc_error

    crc_error The Rule of 72

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    there is nothing wrong with shorting if its done on a separate market..

    the problem is when people have a large leveraged tools to influence the underlying stock price.

    I don't believe you should be able to sell something you don't own.
     
  10. austing

    austing Well-Known Member

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    ASX open now delayed more than 30 minutes until further notice by ASIC.

    I note that shorting of ASX CFDs and OTC CFDs is also banned.

    "ASIC restrict short selling with immediate effect. Find out more.
    22 Sep 2008

    The Australian Securities and Investment Commission has made the following decisions to apply from the opening of the market on Monday, 22 September 2008:

    1. Naked short selling banned
    2. Covered short selling banned (subject to limited authorised market-maker exemption)
    3. ASIC will reassess and advise the market in 30 days, whether or not it will at that time, or at a later date, reopen covered short sales for non-financial stocks.

    ASX will implement the changes by removing all stocks from the permitted list of naked short sales.

    Impact on CommSec customers:
    In order to support the new regulations and return confidence to the financial markets, CommSec has made the following changes effective immediately
    - Day Short Selling - No new orders will be accepted.
    - Term Short Selling – No new orders will be accepted. Clients with open positions can still close out existing positions.
    - ASX CFDs – No new “sell to open” orders will be accepted. Clients with open positions can still close out existing positions.
    - OTC CFDs - No new “sell to open” orders will be accepted. Clients with open positions can still close out existing positions.

    As ASIC and the ASX release more information regarding the changes to Short Selling we will post additional updates on the website to keep CommSec customers informed."

    Cheers
     
  11. crc_error

    crc_error The Rule of 72

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    Looks like they dont know what to do, today is going to be a mad house on the market..

    if they are going to ban shorting, they should implement it over time, not just do it over night.. anyway I'm long, so I welcome any rallies.
     
  12. ActiveTrade

    ActiveTrade Well-Known Member

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    Anyone know what time the market will open ?
     
  13. crc_error

    crc_error The Rule of 72

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    now.. 10:40am
     
  14. crc_error

    crc_error The Rule of 72

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    but I'm yet to see anything trade..
     
  15. crc_error

    crc_error The Rule of 72

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    The market will open at the following times:
    Group 1 (A-B) 11am Group 2 (C-F) 11.04am Group 3 (G-M) 11.08am Group 4 (N-R) 11.12am Group 5 (S-Z) 11.16am
     
  16. crc_error

    crc_error The Rule of 72

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    look at some of those gains on the market at the moment..

    we might be up 500 points today...
     
  17. lorrimer

    lorrimer Well-Known Member

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    And I think a large part of the gain can be atributed to short sellers covering their positions.
     
  18. crc_error

    crc_error The Rule of 72

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    there would be some big losses for some shorters today..

    lets hope all this puts some confidence back into the market and we can go up from here.

    remember the US was up 3.35% Friday night as well..
     
  19. voigtstr

    voigtstr Well-Known Member

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    but will people just sell their profits tomorrow....
     
  20. crc_error

    crc_error The Rule of 72

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    what profits? most people are losing.. there would be few people profiting at present..

    it was the shorters who would short today and tomorrow forcing the market back down...