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Strategies & Market Trends : DAYTRADING Fundamentals
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To: KymarFye who wrote (16133)7/4/2002 8:03:41 PM
From: TheStockStalker  Read Replies (2) of 18137
 
Seems to be allowed by law but was not allowed by Brokers to smaller retail investors until this below.

Broker TDW set to short-circuit market
Thursday 7 Mar 2002
UK private investors will soon be able to take advantage of short selling for the first time


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British private investors are to be allowed to sell shares short for the first time, following the launch of a new service by broker TD Waterhouse.

Short selling means selling shares you do not own (borrowed from a broker or an institution) and repurchasing them later, in the hope of benefiting from an anticipated fall in the price of the stock or the market as a whole.

Paul Stallard of TD Waterhouse explains that the broker has decided to make short selling available to private investors, although a launch date for the service has yet to be fixed. He points out that it is illogical that US and Canadian investors are allowed to sell shares short, but that British investors are not.

Short selling involves a greater degree of risk than buying shares in the hope of their price rising (going long) because a share price can only fall to 0p, whereas it can rise infinitely. Mr Stallard accepts this, saying that TD Waterhouse will educate its clients. The Financial Services Authority is not alarmed, describing short selling as a "legitimate market activity".

Investors have already been taking advantage of the current bearish markets by using other methods to go short of shares. Investors can use options, universal stock futures, contracts for difference and spread betting.

Stamp duty does not apply to any of these derivative instruments (although it will come into play when an option is exercised) and spread bets avoid capital gains tax.
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