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sappatz
18th September 2008, 18:33
http://www.ft.com/cms/s/16102460-85a0-11dd-a1ac-0000779fd18c,Authorised=false.html?_i_location=htt p%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F16102460-85a0-11dd-a1ac-0000779fd18c.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Feurope

sasguru
18th September 2008, 18:35
Oh the FSA suddenly gets some teeth, belatedly, after being neutered by Labour for the past few years :rolleyes:

TykeMerc
18th September 2008, 18:37
About 5 years too late to be honest, but at least it's been done.

The ban should be applied to all companies, not just those in the financial sector, shorting is often carried out with malicious rumour mongering and it's a cynical attack.

AtW
18th September 2008, 18:52
FSA was not doing this stuff before because its main lobbyists - banks, were engaged in this stuff themselves and were making money, now the tables have turned and they are under threat so they got short selling banned pretty quickly - it seems to affect financial companies only rather than all short selling - it's okay to screw everyone else but not the banks, how odd eh?

HairyArsedBloke
18th September 2008, 18:59
It's just another 'something must be done' action by this evil corupt regime.

As noted in a comment on Guido's blog, the FSA found no indication of HBOS manipulation (http://www.ft.com/cms/s/0/3614bfc2-5fd6-11dd-805e-000077b07658,dwp_uuid=11f94e6e-7e94-11dd-b1af-000077b07658.html) back in July.

BrilloPad
18th September 2008, 19:08
FSA was not doing this stuff before because its main lobbyists - banks, were engaged in this stuff themselves and were making money, now the tables have turned and they are under threat so they got short selling banned pretty quickly - it seems to affect financial companies only rather than all short selling - it's okay to screw everyone else but not the banks, how odd eh?

very good point. also, banks are the only companies not allowed to go bust.

sasguru
18th September 2008, 19:08
FSA was not doing this stuff before because its main lobbyists - banks, were engaged in this stuff themselves and were making money, now the tables have turned and they are under threat so they got short selling banned pretty quickly - it seems to affect financial companies only rather than all short selling - it's okay to screw everyone else but not the banks, how odd eh?

You haven't a clue so shut it. See my post above. Labour never allowed the FSA to have any real teeth. There are plenty of sensible people in the City who were unhappy about that.

AtW
18th September 2008, 19:12
You haven't a clue so shut it.

Check the article - new rules only apply to financial companies. If shorting is bad (and I think it is), it should be banned for all companies not just select few banks who are actually large players that short everybody else using hedgefunds, it's just some hedgefunds started shorting banks now so they arranged this for themselves.

SandyDown
18th September 2008, 19:13
OK FSA means: Financial Services Authority, its the body regulating financial organisation... so how on earth is it going to ban or attempt to regulate non-financial companies??!!!

AtW
18th September 2008, 19:14
OK FSA means: Financial Services Authority, its the body regulating financial organisation... so how on earth is it going to ban or attempt to regulate non-financial companies??!!!

FSA regulates stock exchange too doesn't it? Otherwise it would have no force to demand stop short selling in the first place - only (if it regulated banks only) demand that banks themselves won't do it, which they don't anyway - they use hedge funds as their proxies or some shady Ltds in offshores.

SandyDown
18th September 2008, 19:19
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/Communication/PR/2008/102.shtml

AtW
18th September 2008, 19:21
http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/102.shtml

And?

AtW
18th September 2008, 19:24
http://en.wikipedia.org/wiki/Financial_Services_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 :laugh

sasguru
18th September 2008, 19:32
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
18th September 2008, 19:36
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
18th September 2008, 19:45
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
18th September 2008, 19:52
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
18th September 2008, 20:16
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
18th September 2008, 20:21
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
18th September 2008, 20:33
http://www.guardian.co.uk/business/2008/sep/18/banking.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) :rollin:

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.

BigTime
18th September 2008, 20:40
Naked shorting will be banned everywhere soon enough so you'll get your wish there. Stock lending is a genuine business used by all fund managers. http://www.isla.co.uk/associate_members.asp

In my opinion all companies should be regulated in a manner that allows them to go bust and the only assistance from the taxpayer should be stat redundancy and jobseekers allowance.

I may be on the bench soon and will run out of money eventually causing my ltd to be shut. At that time I'll admit I shouldn't have drained the company of cash with my excessive spending. Should I be sent to jail?

Anyone here supporting Global One or the like? Will you be starting your Xmas break early?

lilelvis2000
18th September 2008, 20:41
Wow! someone must have turned on the lights at the FSA!

Was watching Channel 5 this morning (The Wright Stuff???) apparently there is some man in the UK who only shorts stocks and he made an amazing £900M doing that!....its his kinda trader that needs to be stopped.

Nothing wrong with HBOS apparently - just some greedy manipulative traders.

And NOW Gordo comes on TV and says we gotta clean this all up. hah! What's he been doing for the past 10 years! zip, nada, zilch.

About sums up his career.

AtW
18th September 2008, 20:42
In my opinion all companies should be regulated in a manner that allows them to go bust and the only assistance from the taxpayer should be stat redundancy and jobseekers allowance.

Problem is - those guys get huge leverages, this should be illegal - some ponsy nobody would have 10-20 times more liabilities than they have capital, this should not be allowed. Maybe 1.5-2 times max but that's it - it is the huge leverages that were making them lots of money but now they are getting hit with huge losses and run to get bailed out by taxpayer.

Also any job of high responsibility that comes with high pay (in case of success) should have the opposite side of the coin - long jail time in case of failure. If you don't like it - don't take the job, I am sure there will be plenty of people who'd love to get the kind of salaries those guys get.

AtW
18th September 2008, 20:45
I may be on the bench soon and will run out of money eventually causing my ltd to be shut. At that time I'll admit I shouldn't have drained the company of cash with my excessive spending. Should I be sent to jail?

Whether you should go to jail depends on whether you just fooked over yourself as sole shareholder or lots of other people who trusted you - if that number is high and say damage is measured in many millions (and certainly billions) then yes, you should go to jail. These tough rules don't need to be applied to everyone but maybe top 1000 jobs where a fook up would have dire consequences to millions of people. This should apply to politicians too - applying my logic would mean Brown would have been in jail long time ago.

BigTime
18th September 2008, 20:55
Problem is - those guys get huge leverages, this should be illegal - some ponsy nobody would have 10-20 times more liabilities than they have capital, this should not be allowed. Maybe 1.5-2 times max but that's it - it is the huge leverages that were making them lots of money but now they are getting hit with huge losses and run to get bailed out by taxpayer.

Also any job of high responsibility that comes with high pay (in case of success) should have the opposite side of the coin - long jail time in case of failure. If you don't like it - don't take the job, I am sure there will be plenty of people who'd love to get the kind of salaries those guys get.

I bought my flat without a deposit so an infinite amount of leverage there but the building society thought it worth the risk. If I'd never paid it back it would have been between me the bs and the courts. The same thing should happen here with no need for taxpayer money or jail.

AtW
18th September 2008, 20:58
I bought my flat without a deposit so an infinite amount of leverage there but the building society thought it worth the risk.

And if such sales were not allowed by law there would not be house price bubble - don't think it is good example of leverage in any case. Real leverage is what you get from spread betting.

BigTime
18th September 2008, 21:05
And if such sales were not allowed by law there would not be house price bubble - don't think it is good example of leverage in any case. Real leverage is what you get from spread betting.

You should open an account and give it a try. You might enjoy it and even make some cash.

AtW
18th September 2008, 21:07
You should open an account and give it a try. You might enjoy it and even make some cash.

I am not interested in gambling - if I was I'd rather go to betfair or casino as chances of winning there are much better than on stock market. Plus I like to keep my hands clean :eyes

Stan.goodvibes
18th September 2008, 21:17
Hmmmm,

I was all for the idea of banning short-selling but this guy does have a point...

http://blogs.telegraph.co.uk/alex_singleton/blog/2008/09/18/short_selling_helped_promote_truth_about_hbos_and_ lehman_brothers

Now I am not so sure. But at least we can all watch this 'experiment' over the next few weeks and months and see if it helps or hinders. Now that some of the irresponsibility of the banks over the last few years is coming to light it might be a step backwards to remove potential whistle-blowers from the finance sector, when right now accountability and transparency are paramount for confidence to return to the markets.

TykeMerc
18th September 2008, 22:22
As I said earlier shorting nothing short of a cynical attack on a company, if rumours can be spread a lot of ordinary investors (including OUR pension funds) get wiped out so that a couple of guys in the city can run off with multiple millions. Killing off HBOS is likely to mean 5-10 thousand people in my town losing their jobs which will kill off numerous businesses in West Yorkshire and possibly destroy the Halifax local economy. This market manipulation will damage if not ruin god knows how many thousands of families.

All of these market manipulating attacks and companies should have been made internationally illegal years ago as it's nothing short of institutionalised theft on a massive scale.

I'm not fighting AtW's corner here, I just think that shorting is completely immoral. The bastards involved should have all of their assets stripped, be publically whipped and electro shocked daily for 50 years and their families should be sold for organ transplants.

Alf W
18th September 2008, 22:24
What is the difference between buying shares in a company in the hope that they will be worth more when you come to sell them than selling shares ... less than .. buy them back? Nothing. The two options need to balance each other out in an open market.

There's other more highly leveraged ways of doing this, CFDs, options and futures so banning the most simple mechanism isn't going to help one bit.

Is anyone suggesting that in a rampant bull market the practice of buying shares should be banned? Utter rubbish.

The banks that got in the 5h1t are the ones who got themselves too highly geared. Lloyds TSB has been criticised over the past few years for being too boring and conservative. HBOS has aggressively pummelled the UK market, overstretched itself and not diversified globally. All eggs in one basket and CRASH.

IBs similarly take big gambles with borrowed monies. They've tripped over their big swinging d*cks.

Barclays has been a bit lucky as it very nearly over-Americanised itself a couple of years ago. Pimping itself to the Chinese and Arabs has proved to be a blinder of a move.

Anyway, ***** off Howard. We'd had enough of you in any case.

AtW
18th September 2008, 22:31
What is the difference between buying shares in a company in the hope that they will be worth more when you come to sell them than selling shares ... less than .. buy them back? Nothing. The two options need to balance each other out in an open market.

:laugh

Big difference - buying shares for dividends and long term growth is positive - it puts money into the company, where as shorting fks up company by depressing its shares so it will increase borrowing costs (when shares were the collateral) and many other negative consequences including forcing long term investors to get scared and drop shares.

Shorting is NOT meant to balance out buying - selling is, but shorters sell something they don't have in order to create something from nothing at the expense of every other normal market participants.

Diver
18th September 2008, 22:59
:laugh

Big difference - buying shares for dividends and long term growth is positive - it puts money into the company, where as shorting fks up company by depressing its shares so it will increase borrowing costs (when shares were the collateral) and many other negative consequences including forcing long term investors to get scared and drop shares.

Shorting is NOT meant to balance out buying - selling is, but shorters sell something they don't have in order to create something from nothing at the expense of every other normal market participants.

"Con artists" is the term you're looking for AtW

Alf W
18th September 2008, 23:09
I'm not going to argue with you AtW over this, as it would feel like a bit like punching a man in a wheelchair.

AtW
18th September 2008, 23:10
I'm not going to argue with you AtW over this, as it would feel like a bit like punching a man in a wheelchair.

How do you know how it feels? Sounds like you punched someone :ind

Bagpuss
18th September 2008, 23:11
He's a city fan, men in wheelchairs is their division:laugh

AtW
18th September 2008, 23:12
He's a city fan, men in wheelchairs is their division:laugh

:rollin:

Here is my brilliant solution to all Man City bitter dejected fans problems - close the shop and support the real team in the City - ManU. No shame in joining the winning team - you'd be happy as it would win, obvious solution to all problems. This would save a lot of wheelchair users from being punched too :eyes

ace00
19th September 2008, 06:38
If this stays in place will it not have the opposite effect to that intended?
ie. many investors will not buy the stock as they are restricted in covering their position by shorting? And secondly will it further spook UK markets due to fear of further government intervention by Mr. G."lets sell our Gold at $250" Brown?

GreenerGrass
19th September 2008, 06:43
I'm disappointed, I was 99% certain the first thread I would see this morning would be titled "BOOMED! Markets that can only ever go up!" by DimPrawn.

Diver
19th September 2008, 06:59
I'm disappointed, I was 99% certain the first thread I would see this morning would be titled "BOOMED! Markets that can only ever go up!" by DimPrawn.

Boom Is Doomed I'm afraid :D

HTH

HairyArsedBloke
19th September 2008, 07:04
It will not put anyone off opening a long position as the way to close that position, as AtW rightly points out, is called ‘Selling’. It will harm the City in many ways; not least of all is the prospect of more, almost random and with short or no notice, introduction of regulation and restrictions.

There are potential abuses available in all forms of transaction. Should there be a ban on buying too, because ‘speculants’ could sell at a higher price and get a profit that way?

ace00
19th September 2008, 07:32
There are potential abuses available in all forms of transaction. Should there be a ban on buying too, because ‘speculants’ could sell at a higher price and get a profit that way?

Gordon will decide what your company is worth.

HairyArsedBloke
19th September 2008, 08:26
Questions are being asked. FT: Alphaville: 'HBOS: Where are the shorts' (http://ftalphaville.ft.com/blog/2008/09/19/16123/hbos-where-are-the-shorts/).

It's going to bite the snot goblin in the :moon:

sasguru
19th September 2008, 08:27
Let the fooking market decide who's efficient and who's not.
atw can fook off back to Russia and build his utopian state.
Oh hang on, it's been tried already :rolleyes:

Andy2
19th September 2008, 08:38
So in the absence of shorting is it correct to assume that financial shares will move only one way - UP

BOOMED

ThomasSoerensen
19th September 2008, 08:48
So in the absence of shorting is it correct to assume that financial shares will move only one way - UP

BOOMED

they have not banned selling a long position with a loss yet, have they?

AtW
19th September 2008, 09:09
Let the fooking market decide who's efficient and who's not.

I don't think you even know what "efficient market" is - hint: it's not when you make shredload of money, this has nothing to do with efficiency.

http://en.wikipedia.org/wiki/Efficient_market_hypothesis

"In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient", or that prices on traded assets, e.g., stocks, bonds, or property, already reflect all known information."

People who short are trying to manipulate the market - it's an artificial attempt to make money from nothing at the expense of long term investors.

Dow Jones
19th September 2008, 09:19
TS, you may or may not know that long- and short-selling are both sides of the same coin. Unfortunately, the latter is much more lucrative, especially if engineered rumours start to prevail.
The HBOS downfall was caused by both shorting and unusual heavy selling by a no of institutions (most of which chose to operate via the same counterparty-often disguised-that was used for the shorting).
In my opinion and some of our traders I have spoken to, the HBOS shares should have been suspended - pending an enquiry whilst banning the practice - and - in order to prevent a potential run on savings that may have ensued - for the Gov't to intervene and buy a chunk of shares with a view of selling back when the markets have been steadied.
As SG said, the FSA once gain has proved to be a joke.