Here’s Adam Warner’s take on the exemption to the ban on short-selling 799 financial stocks,… Think if we search a little longer we’ll find a conspiracy theory?
The SEC to the Rescue
A little confusion as to whether MM’s have some sort of exemption to the New World Order.
Just heard on TV that an "Unintended Consequence" was the freezing up of options markets.
Unintended? C’mon Ben and Hank, I thought you read my site? We’ve gone over the topic a bit lately. Gives you real confidence how well they thought out this plan.
Well, a couple martini’s later and the Options Market Makers Are Exempt! They can carry on their anti-American stock shorting with impunity again!
This from my friend Greg.
The Securities and Exchange Commission’s Division of Trading and Markets today issued the following statement:
“The Commission staff is recommending to the Commission a modification to its order prohibiting short selling in securities of specified financial firms. This modification would extend, for the life of the order, the exemption for hedging activities by exchange and over-the-counter market makers in derivatives on the securities covered by the order.”
So we have that going for us.
Which is nice.
Seriously, it’s good from the standpoint that at least they’ll be able to sell puts now. But what if I want to sell them? I’m going to still need a better price if I can’t short stock. So it’s a bit of an untenable situation if the floor can sell them way better than anyone else.
What about firms that are both options market makers and a million other different things. I’m looking at you Susquehanna. Are they going to wall off short sales in only stocks in which they make options markets? Which is probably everything.
Now that Pandora’s Box is open, how about market makers in ETF’s who need to sell baskets of stocks to hedge? Or anyone that buys a Convertible Preferred? Or……whatever, it’s just too ridiculous on so many levels that they took this step. I mean the step of banning shorts altogether, not relaxing it a bit.
Bottom line is it’s all untenable. What’s going to happen when they walk us back out and allow shorting again? Would it have been so tough to actually enforce the rules to begin with?
Credit where due to some Bubblevision pundits. Liesman, Santelli, Haines, Faber, Rhatigan, come to mind. All deviated from the usual party Cheerleading Line and called out the powers that be on this.
