Hmmmmmmmm ..... seems to me that short selling and the extended use of derivatives just creates a short term trading market ..... great for a few traders short term but doesn't go anywhere. May as well go down the casino and play roulette or blackjack.

ains




FSA says no to short selling controls
Anthony Hilton, Financial Editor, Evening Standard
30 April 2003

HE Financial Services Authority* has come down strongly against new controls on short selling* in the UK market but is to promote more transparency and disclosure of information so market participants have a better feel for what is going on.

In what is called a feedback statement published today, the regulator says there is no case for artificial constraints on short selling and has no proposals for a ban or a more restrictive regime. Instead it endorses the view laid out in a discussion document published last autumn which says that short selling is a legitimate investment activity which supports an efficient market.

The conclusion may upset some executives and fund managers* who believe share prices were undermined by hedge fund short selling last year, and may not find favour either with some European regulators who believe short selling should be controlled or banned.


The FSA's view, however, is that market volatility in jurisdictions where short selling is controlled is even greater than it is in London, so there is no evidence that short selling adds to instability.

It says further that even to introduce a market reporting regime for short selling would cost between 30m and 50m to set up and there is no evidence that enough people want the system to justify the cost.




2003 Associated Newspapers Ltd. All rights reserved.

How do you know it wasn't adequetly funded? how do you know what assumptions they made? how would you know what inflation targets they had.

How would you know whether shorting disclosure had any effect ot not - you have no idea what shares they held



ains

well it obviously has a black hole which means that it didn't perform as expected otherwise more money would have had to have been contributed earlier on by the company to ensure that it met the requirements of the members.

An underfunded final salary scheme is not at all unique and very few companies now operate them for new employees but they are required to keep them going for existing members.

I'm sure it was adequately funded providing that the funds under management met growth and inflation predictions.

If this particular scheme has a black hole it is obvious that it didn't meat initial growth and inflation projections.........

It's not rocket science

hmmmmmmmmmm .... you seem to be making too many 'obvious' conclusions without knowing any of the detailed facts.

The Bylth and Bylth scheme doesn't have enough money to meet its commitments: therefore it is underfunded. QED. So are a whole bunch of others. Why? Because the markets failed to go ever upwards. Is this to do with short sellers? No. They merely take advantage of a falling market, they do not cause it per se. If the market continues upwards, shorters would always lose.

95% of trades on the LSE are made automatically by computers. That leaves 5% for the devilish human shorters.

I hope this helps.

MM

Ains,

I have never understood why you have such a bug bear about short selling, there is a buyer and a seller behind every counter party transaction, no difference between buying low and selling high, or selling high buying low.

Why shouldn't people arbitrage value perceptions either way round?

In the end intrinsic value will come out, no point blaming short selling for one's investment errors, I never do, the buck stops with me.

Yes, and I get it wrong, and need to face it when I do, tough, but one must.

Reality is the market like a football pich has two halves, as one very successful short seller put it, shares go up, they also come down, why not make money in both directions?

Until you convince yourself on the underlying reality of the markets, you can never play it properly, short selling is a reality, and profiting from downward moves is common sense as a result.

Short sellers don't drive markets, supply and demand economics do. The price the buyer and seller transact at drives the price, not the number of buyers or sellers in the market, it is the price exchange of a transaction that sets the price for the following deal on the bid and offer result of that transaction completion.

Successful traders must never be perma bulls, nor perma bears, but they must be realists.

Cheers

Ash

I wasn't aware I was blaming anyone for making a poor investment decision .... in fact I was talking from strength.

I liken the basic concept of short selling without disclosure to someone selling your shares for you - or maybe your house ...... because they have decided property prices are too high in your area. I am neither a permanent bull or bear and having played the market (succesfully) since I was at school - believe I am a realist ..... that does not mean I have to agree with the majority trader view. As a short term trader you may well like the current system but that doesn't make it right.

What I am saying is simple - we need transparency and then control otherwise everyone becomes a short term trader and there will be no investment.



ains

Ains,

Interesting reply, and a good one, I need to sleep on it you have raised some highly valid and intensely relevant points.

I must sleep on it, although not sure how you can force people to buy over valued equities at PERs of 3 times bear bottoms in USA (22.50 versus 7.50).

Cheers

Ash