Temp Rule on Short Selling
The Securities and Exchange Comission has announced a temporary rule on short selling of investment bank stocks as well as the stock of Fannie Mae and Freddie Mac. The rule will require brokers to actually pre-borrow the shares before shorting a stock. Currently many short sellers could short a single stock based on the same shares; the new rule will require a broker to cover shorts, share for share by removing shares from the market once a stock has been shorted. The SEC will consider extending this rule to the broader market. To me this is kind of a “duh,” or, self evident principle that should have led to reform years ago.
This entry was posted on Tuesday, July 15th, 2008 at 3:53 pm and is tagged with fannie mae and freddie mac, securities and exchange comission, shorting a stock, bank stocks, fannie mae, short sellers, freddie mac, investment bank, securities and exchange, principle. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback.
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