Comments on: Selling the effects of short selling short http://www.crikey.com.au/2008/11/19/selling-the-effects-of-short-selling-short/ now with extra source Tue, 24 Nov 2009 19:34:24 +1100 http://wordpress.org/?v=2.8.6 hourly 1 By: nick http://www.crikey.com.au/2008/11/19/selling-the-effects-of-short-selling-short/#comment-18898 nick Thu, 01 Jan 1970 10:00:00 +0000 #comment-18898 da da

]]> By: Bill http://www.crikey.com.au/2008/11/19/selling-the-effects-of-short-selling-short/#comment-18899 Bill Thu, 01 Jan 1970 10:00:00 +0000 #comment-18899 It might help the short-sellers' case if their short positions were transparent to the rest of the market in the first place. If there really is nothing wrong with the practice, then its practitioners should not only be defending its legitimacy: they should have been leading the case for immediate and complete disclosure of all short positions in the market since the beginning of the campaign against them. Otherwise, this kind of commentary strikes those of us who do not pretend to know the truth of the matter - and who try to invest rationally on the basis of the best publically available information - as disingenuous. It might help the short-sellers’ case if their short positions were transparent to the rest of the market in the first place. If there really is nothing wrong with the practice, then its practitioners should not only be defending its legitimacy: they should have been leading the case for immediate and complete disclosure of all short positions in the market since the beginning of the campaign against them. Otherwise, this kind of commentary strikes those of us who do not pretend to know the truth of the matter - and who try to invest rationally on the basis of the best publically available information - as disingenuous.

]]> By: Peter Francis http://www.crikey.com.au/2008/11/19/selling-the-effects-of-short-selling-short/#comment-18900 Peter Francis Thu, 01 Jan 1970 10:00:00 +0000 #comment-18900 Short Selling is controlled by a combination of Law ans the ASX Rules for example the Law states that Short Selling is prohibited exempt for a number of exemptions. One of them is on an approved market. The approved market must have appropriate rules to deal with the short selling.<br /><br />On the ASX, short selling is controlled under Section 19. It has the following limiteations. Only in Approved Products (Rule 19.7) in other word not ever share can be shorted; Limited to 10% of Market Cap (Procedure 19.5.1), Reporting to the ASX (Rule 19.6), zero-tick rule (Rule 19.3.3) and an Abritrage exemption (Rule 19.2).<br /><br />However, we have seen multiple articles over the last 6 months that have shown that these rules have been breached. The ASX were not maintaining the reporting requirements and therefore did not known, and still does not know how much short selling is in the market.<br /><br />It has failed it own rules. However, has not been sanction by ASIC, as ASIC has also failed to regulated these as well. We are in crisis situations and our regulators are failing us.<br /><br />Yesterday was interesting. Even though short selling is prohibited in Financial Stocks we saw large short selling as a % of volume. ANZ (29%), CBA (15%), NAB (69%) and WBC (32%). The ASX have attributed this to arbitragers. This is not possible as the size of the otherside of the abritrage transaction was not available.<br /><br />So what we have is still illegal short selling. This practice was going on even through the ban. The ban was only on new short sales, not existing short sales. So if the position was established prior to the ban, there was no requirement ot unwind the position. Quite ludicrous for the regulator to have miss that one and shows that they are not capable of managing the market place.<br /><br />A Royal Commission into this disaster should be called. Short Selling is controlled by a combination of Law ans the ASX Rules for example the Law states that Short Selling is prohibited exempt for a number of exemptions. One of them is on an approved market. The approved market must have appropriate rules to deal with the short selling.

On the ASX, short selling is controlled under Section 19. It has the following limiteations. Only in Approved Products (Rule 19.7) in other word not ever share can be shorted; Limited to 10% of Market Cap (Procedure 19.5.1), Reporting to the ASX (Rule 19.6), zero-tick rule (Rule 19.3.3) and an Abritrage exemption (Rule 19.2).

However, we have seen multiple articles over the last 6 months that have shown that these rules have been breached. The ASX were not maintaining the reporting requirements and therefore did not known, and still does not know how much short selling is in the market.

It has failed it own rules. However, has not been sanction by ASIC, as ASIC has also failed to regulated these as well. We are in crisis situations and our regulators are failing us.

Yesterday was interesting. Even though short selling is prohibited in Financial Stocks we saw large short selling as a % of volume. ANZ (29%), CBA (15%), NAB (69%) and WBC (32%). The ASX have attributed this to arbitragers. This is not possible as the size of the otherside of the abritrage transaction was not available.

So what we have is still illegal short selling. This practice was going on even through the ban. The ban was only on new short sales, not existing short sales. So if the position was established prior to the ban, there was no requirement ot unwind the position. Quite ludicrous for the regulator to have miss that one and shows that they are not capable of managing the market place.

A Royal Commission into this disaster should be called.

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