Hope I'm not interupting anything. I need everyone's help. Naked shorting should be illegal. Some market makers claim that they use naked shorting as a tool for providing an orderly market, but they are lying peices of shit !! (Hope I was clear on that)
The provision permitting dealers to short stock without borrowing it first enables them to provide liquidity when their own inventories are tapped out. It's as simple as that. SRO and SEC bylaws pertaining to this provision specify that this must only be done in the course of acting in a bona fide market making capacity.
The market should decide what is orderly and what is not. It should not be up to any one person to decide which direction a stock should go, or when it has gone high enough.
That's right. The market should decide, and it does. Contrary to your assertion that the market (either by issue or as a whole) direction is determined by "any one person" who "decide[s]" which direction a stock's price should move in, it's the collective actions of millions of individual traders - all with varying degrees of skill and access; hundreds of private partnerships, hedge funds, and proprietary trading firms; over 400 dealers; 10 ECNs; and one UTP participant that, on NASDAQ, comprise "the market" in a given issue at a given time.
Most times, market makers are using their right to naked short stocks to pummel the crap out of them.
Where is your proof? How do you know this? What documentation, sources, or evidence do you have that will show that "most times," these firms are using their regulatory authority to, in certain circumstances, short stocks without a borrow to "pummel the crap" out of them?
Well, I say, if I can't naked short a stock, why should anyone else have the right to do it.
The same reason why cops and the military can carry weapons and you can't: because there is a function being provided that requires, and justifies, certain privileges. Dealers carry inventory and, indeed, "make" the markets, whether on the box, via ECNs, or in handling institutional orders. For this reason and, recognizing that sometimes things move incredibly fast, dealers are granted the right to continue to fill buy orders after their inventories are tapped out. This creates the naked short positions which the misguided continually whine about.
I call on each and every trader here to send a mass of constant and repetitive emails to the SEC demanding that this illegal activity be stopped.
So you're soliciting people to blast the Securities and Exchange Commission with a consistent stream of repetitive email messages? See below*
Naked shorting is a license to steal.
How? A stock begins moving up, Dealer ABCD is at the inside offer. He fills the buyers coming in, moves up a level, and they keep coming. He fills until he has no stock left. With more buyers taking his offer, he fills more, and eventually ducks out.
Why does he duck out? Because no dealer will permit himself to be caught with a huge, naked short position. It's too dangerous, and risk desks would jump through their skins if they saw such activity.
What's stolen?
Stealing is illegal.
It sure is.
Market makers are not supposed to be Gods, but some of them seem to think they are.
LOL.
Please, join together to fight for a fair market. We will level this playing feild one damn rule at a time. We got the selective disclosure thing while the bonehead theiving analysts fought it. We can get rid of this naked shorting thing too if we are persistant. To help, send emails on a regular basis to ...enforcement@sec.gov. They will send you a form letter in return saying that they have received your mail and that they will look into it, blah, blah, blah. Just reply to each one of those form letters until they get the point.
*How responsible is it to complain (however confusedly) about supposed securities violations and then openly encourage people to send reams of electronic mail to the body charged with investigating and enforcing the same?
As I would see it, doubts about the seriousness of an already vacuous allegation would be confirmed upon an ensuing email blitz pertaining to the same issue(s).
I truely beleive the SEC is a quality organization and that they are out for the individual investor. Sometimes you just have to light a fire under their ass.
The SEC - and, in particular, this SEC, under Arthur Levitt, is the best ever, IMHO. They've been proactive and addressed enough things that, if naked shorting was in fact, a problem...don't you think they'd have done something about it? The Order Handling Rules in 1996/97 and Regulation ATS in 1998 both examined short selling; could it be that there just isn't something to "fix"? ;-)
Indeed, who has the "God complex" mentioned earlier when they see themselves as the catalyst needed to "light a fire under the ass" of an organization which has been so diligent and proactive?
Or, does the "God complex" reside in the belief that either your stocks shouldn't be subject to the rules of supply and demand...or, that you are so good at picking stocks, that yours should somehow move the way you ordain them to, and you alone?
Imagine owning a stock that you have been sitting on for quite some time. One day, news comes out from the company you are vested in and it is fabulous news. But one or 2 of the market makers is a little short on inventory so they decides to "squash" the rally by selling, and selling, and selling stock that he does not own, he has not borrowed properly like the rest of us have to do, in an effort to create an illusion that there is something wrong with the stock, creating fear in new investors. You come home, and your stock made a nice move, but then, got squashed...even in the face of heavy buying. Who has the right to take that return from you as an investor?
First, heal thyself.
The people who "took the money" from "you the investor" were other investors and traders - not a market maker. If the market maker is "selling, and selling, and selling," there must be individuals buying, and buying, and buying. And, when the buying slows, prices are lowered to find the price level.
Indeed, if you were selling some speculative item for $10,000 apiece, and raised the price to $11K (more buyers), $12K (more buyers), $13K (still more buyers) and then $15K - and there are suddenly no buyers, hmmm. Don't you think the next move would be to lower the price back to $14K, or $13K, or $12K, to keep the order flow moving and find the "correct" price level at that moment?
Often, those who got in at $11K and $12K would panic, start selling, and at that point, the fall would become precipitous. Other times, at $12K buyers would re-enter, and market forces would push the issue up to $17K. No conspiracy, no "slamming" of the stock, just supply and demand.
Most market makers think they do. And the law is giving them the right to do it. That law needs changing....now!
First of all, it's not a law. No one goes to jail for shorting naked, whether a customer or registered individual, whether done in a bona fide dealing transaction or for speculative purposes - which is, as earlier stated, prohibited. Regardless of that, short selling provisions are a function of the bylaws of the NASD and the NYSE.
Hey, I'm no dummy, I know they have to cover, but the bottom line is they have interupted the normal flow of money in your stock. And that ain't right.
How? Short now, buy later; buy now, short later. Let me tell you what would interrupt the "normal flow of money" in a stock, though I'm going to call it the "order flow."
The order flow would be distorted if, in the course of an uptrend, dealers simply ran out of stock. You wind up with a choppy, discontinuous market where price discovery (leading to the oft quoted "fair and orderly market") would be virtually impossible.
You think you've seen some stocks move sharply? Let dealers only sell what they hold in inventory in some of the thinner issues and watch what happens when the stock sees some action on news or earnings.
Do your part.
I just did. :)
I wouldn't submit that there either ALL naked shorting is done in the bona fide manner or that there are NO naked short sales done with a speculative bend in mind. However, I would strongly assert that:
a) it has no bearing on the price/direction of a stock;
b) any naked short sales which are done for speculative purposes are of an absolutely de minimus amount (as compared to all transactions, long or short);
c) that naked shorting is a scapegoat for poor investment decisions and a general lack of understanding of market mechanics; and
d) that if there was something grossly wrong or unfairly affecting the market as a result of the undertaking of such transactions, that regulators would have stopped it a long time ago.
LPS5 |
