ID :
20341
Sat, 09/20/2008 - 10:11
Auther :
Shortlink :
http://m.oananews.org//node/20341
The shortlink copeid
US regulator bans short selling in fin stocks to cool markets
Dharam Shourie
New York, Sep 19 (PTI) The U.S. Securities and Exchange Commission (S.E.C.), acting in concert with the U.K. Financial Services Authority, Friday temporarily banned short selling -- a practice employed by traders to bet a particular stock would fall -- in financial scrips to calm volatile markets.
The SEC's emergency order will be immediately effective
and will terminate at 11:59 p.m. local time on October 2.
But the Commission said it may extend the order beyond 10
days if it deems an extension necessary in the public interest
and for the protection of investors, but will not extend the
order for more than 30 calendar days.
In a statement, S.E.C. Chairman Christopher Cox said: "The
Commission is committed to using every weapon in its arsenal
to combat market manipulation that threatens investors and
capital markets."
He expects that the emergency order temporarily banning
short selling in 799 financial stocks will restore equilibrium
to markets. "This action, which would not be necessary in a
well-functioning market, is temporary in nature and part of
the comprehensive set of steps being taken by the Federal
Reserve, the Treasury, and the Congress," he said.
Today's decisive S.E.C. action calls a time-out to
aggressive short selling in financial institution stocks,
because of the essential link between their stock price and
confidence in the institution.
The Commission said it will continue to consider measures
to address short selling concerns in other publicly traded
companies.
Under normal market conditions, short selling contributes
to price efficiency and adds liquidity to the markets, S.E.C.
noted, saying that at present, it appears that unbridled short
selling is contributing to the recent, sudden price declines
in the securities of financial institutions unrelated to true
price valuation.
"Financial institutions are particularly vulnerable to
this crisis of confidence and panic selling because they
depend on the confidence of their trading counterparties in
the conduct of their core business," it added.
The Commission's action is similar to announcement by the
U.K. F.S.A., whom the S.E.C. has been engaging in regular
consultations on short selling matters.
Other steps taken by the Commission include addressing
the recent market conditions that temporarily requires
institutional money managers to report their new short sales
of certain publicly traded securities. These money managers
are already required to report their long positions in these
securities.
It has temporarily eased restrictions on the ability of
securities issuers to re-purchase their securities. This
change will give issuers more flexibility to buy back their
securities, and help restore liquidity during this period of
unusual and extraordinary market volatility, the Commission
said. PTI DS
KNO
New York, Sep 19 (PTI) The U.S. Securities and Exchange Commission (S.E.C.), acting in concert with the U.K. Financial Services Authority, Friday temporarily banned short selling -- a practice employed by traders to bet a particular stock would fall -- in financial scrips to calm volatile markets.
The SEC's emergency order will be immediately effective
and will terminate at 11:59 p.m. local time on October 2.
But the Commission said it may extend the order beyond 10
days if it deems an extension necessary in the public interest
and for the protection of investors, but will not extend the
order for more than 30 calendar days.
In a statement, S.E.C. Chairman Christopher Cox said: "The
Commission is committed to using every weapon in its arsenal
to combat market manipulation that threatens investors and
capital markets."
He expects that the emergency order temporarily banning
short selling in 799 financial stocks will restore equilibrium
to markets. "This action, which would not be necessary in a
well-functioning market, is temporary in nature and part of
the comprehensive set of steps being taken by the Federal
Reserve, the Treasury, and the Congress," he said.
Today's decisive S.E.C. action calls a time-out to
aggressive short selling in financial institution stocks,
because of the essential link between their stock price and
confidence in the institution.
The Commission said it will continue to consider measures
to address short selling concerns in other publicly traded
companies.
Under normal market conditions, short selling contributes
to price efficiency and adds liquidity to the markets, S.E.C.
noted, saying that at present, it appears that unbridled short
selling is contributing to the recent, sudden price declines
in the securities of financial institutions unrelated to true
price valuation.
"Financial institutions are particularly vulnerable to
this crisis of confidence and panic selling because they
depend on the confidence of their trading counterparties in
the conduct of their core business," it added.
The Commission's action is similar to announcement by the
U.K. F.S.A., whom the S.E.C. has been engaging in regular
consultations on short selling matters.
Other steps taken by the Commission include addressing
the recent market conditions that temporarily requires
institutional money managers to report their new short sales
of certain publicly traded securities. These money managers
are already required to report their long positions in these
securities.
It has temporarily eased restrictions on the ability of
securities issuers to re-purchase their securities. This
change will give issuers more flexibility to buy back their
securities, and help restore liquidity during this period of
unusual and extraordinary market volatility, the Commission
said. PTI DS
KNO
