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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » If SEC relax credit policy, short-selling should be allowed

If SEC relax credit policy, short-selling should be allowed

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Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
It is not a secret, brokers and their so called association asking SEC to relax credit regulations for their own sake, IMHO. They do not (IMHO, never) worried of retailers. If SEC allow credits,they may create another big credit bubble as they want to give away more and more credit and earn interest on it.

My suggestion is if SEC relax credit policy by any mean, short-selling should be allowed. So that credit bubbles may not create and many manipulations can be avoided. What do you think?

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Yea agree with you 100%..that is the only way to prevent..fake runs,and bubbles from forming..

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
what does it mean by short selling ?

invest-abc


Manager - Equity Analytics
Manager - Equity Analytics
@Academic wrote:
It is not a secret, brokers and their so called association asking SEC to relax credit regulations for their own sake, IMHO. They do not (IMHO, never) worried of retailers. If SEC allow credits,they may create another big credit bubble as they want to give away more and more credit and earn interest on it.

My suggestion is if SEC relax credit policy by any mean, short-selling should be allowed. So that credit bubbles may not create and many manipulations can be avoided. What do you think?

Id love to see short selling at CSE. This will keep the traders interested even in a bearish market. Also, this will enable bargain hunters to pick their stocks at very low prices. At least initially till the Market gets used to the new tool, there will be great profit opportunities for smart players.

But unless credit rules are relaxed no way they should introduce short selling.

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Please refer the below link..

http://forum.srilankaequity.com/t3206-going-short?highlight=short+selling

Happy Trading

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
yea that is true credit rules need to be changed

invest-abc


Manager - Equity Analytics
Manager - Equity Analytics
[quote="Academic"]
It is not a secret, brokers and their so called association asking SEC to relax credit regulations for their own sake, IMHO. They do not (IMHO, never) worried of retailers. If SEC allow credits,they may create another big credit bubble as they want to give away more and more credit and earn interest on it.

My suggestion is if SEC relax credit policy by any mean, short-selling should be allowed. So that credit bubbles may not create and many manipulations can be avoided. What do you think?
[/quot

With regard to the manipulators, they will some how push their shares up to unrealistic levels and exit at the peak. Then they will start shorting massive amounts and create panic selling so they could collect low again. So innocent retails will loose on both sides....



Last edited by invest-abc on Fri Aug 05, 2011 7:14 pm; edited 1 time in total

Thor


Senior Equity Analytic
Senior Equity Analytic
Agree with invest-abc. Short-selling would make the market much more interesting!

upuldi

upuldi
Senior Equity Analytic
Senior Equity Analytic
@Academic wrote:
It is not a secret, brokers and their so called association asking SEC to relax credit regulations for their own sake, IMHO. They do not (IMHO, never) worried of retailers. If SEC allow credits,they may create another big credit bubble as they want to give away more and more credit and earn interest on it.

My suggestion is if SEC relax credit policy by any mean, short-selling should be allowed. So that credit bubbles may not create and many manipulations can be avoided. What do you think?

Totally agreed....

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@invest-abc wrote:
@Academic wrote:
It is not a secret, brokers and their so called association asking SEC to relax credit regulations for their own sake, IMHO. They do not (IMHO, never) worried of retailers. If SEC allow credits,they may create another big credit bubble as they want to give away more and more credit and earn interest on it.

My suggestion is if SEC relax credit policy by any mean, short-selling should be allowed. So that credit bubbles may not create and many manipulations can be avoided. What do you think?

By the with regard to the manipulators, they will some how push their shares up to unrealistic levels and exit at the peak. Then they will start shorting massive amounts and create panic selling so they could collect low again. So innocent retails will loose on both sides....

That is true,but we retailers also account for about 40%..of the market activity,maybe more..so retailers also can cause some movement..
Also with retailers shorting..the higher they push prices up..the more profits retailers can make shorting..

m2_yapa

m2_yapa
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@sapumal wrote:what does it mean by short selling ?

The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
I do not think any form of selling is a good idea, force selling, panic selling etc. …. Whatever the form of overselling can have an overall negative impact. This type of things does not succeed with all stocks. ........Some stocks ....the most of the share holders are medium term and long term....SEC might relax some strict mesures as large proprtion of credit is cleared. ... market would grow slowly.... Very Happy Smile Very Happy

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
But it is also,needed for further development of our equity market..it is done all over the world i dont see why CSE should not implement it in the next few years..
just for everyones information,CSE tried to implement this in the 90's but..due to the war breaking out very badly,etc..it was stopped..Smile

Happy Trading.

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics
I am in favour - Short selling should be introduced. At the moment, there is only one way to trade: Buy and then wait for a decent selling price. That explains why there are invariably more sellers than genuine buyers on almost every share.

Permitting short sales would give an opportunity to the bears... Now, when you are bearish, you just have to stay on the sidelines and watch! If you could sell first and buy later, we would see many more buyers in the queue.

Because of the higher volumes due to this, brokerage charges could possibly be reduced... Did you know that the NSE (in India) charges only 0.1% on the buy side and 0.1% on the sell side for intra-day online trades?

NightStalker


Senior Equity Analytic
Senior Equity Analytic
@Antonym wrote:I am in favour - Short selling should be introduced. At the moment, there is only one way to trade: Buy and then wait for a decent selling price. That explains why there are invariably more sellers than genuine buyers on almost every share.

Permitting short sales would give an opportunity to the bears... Now, when you are bearish, you just have to stay on the sidelines and watch! If you could sell first and buy later, we would see many more buyers in the queue.

Because of the higher volumes due to this, brokerage charges could possibly be reduced... Did you know that the NSE (in India) charges only 0.1% on the buy side and 0.1% on the sell side for intra-day online trades?

Machang IMHO if the uptick rule is not in place, most of our retailers will run prices down of stocks, and get there hands burnt sooner rather than later. And since even brokers nor most investors would know about it there will be damaging issues.

That being said I also would like to see shorting in our market so that at least bubbles will happen less frequently in overvalued shares.

invest-abc


Manager - Equity Analytics
Manager - Equity Analytics
@Antonym wrote:I am in favour - Short selling should be introduced. At the moment, there is only one way to trade: Buy and then wait for a decent selling price. That explains why there are invariably more sellers than genuine buyers on almost every share.

Permitting short sales would give an opportunity to the bears... Now, when you are bearish, you just have to stay on the sidelines and watch! If you could sell first and buy later, we would see many more buyers in the queue.

Because of the higher volumes due to this, brokerage charges could possibly be reduced... Did you know that the NSE (in India) charges only 0.1% on the buy side and 0.1% on the sell side for intra-day online trades?

Very refreshing thoughts on the commission charges...Yes! more volume...less commission..

Investor99


Manager - Equity Analytics
Manager - Equity Analytics
I don’t think short selling should be introduced to the CSE as there are so many inexperienced investors in the market today who might not know how it works and might end up having a bad experience. Also I don’t think SEC has the experience to gauge the impact of short selling might have to the market as a whole like control etc.

May be few years down the road short selling should be introduced but not at the present moment with all this mess.

Actually in my opinion SEC acted too late for the unregulated credit issue this just shows how inexperience they are, at least it’s good that they have acted before it too late.

wis


Manager - Equity Analytics
Manager - Equity Analytics
I've read somewhere short selling is already there in CSE. It's just that brokers are not providing the facility.

Broker charges is a major problem in CSE. Stock price has to go up considerably to make a profit after we offer the the lion's share as commission. This is a major issue SEC should fix soon. This will increase the liquidity immensely.

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
great comments guys..specially about commissions,etc..

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I also think the substantial broker fee would be one reason why they(brokers) are promoting overvalued IPOs and shares with little regard to professional ethics.

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