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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: KymarFye who wrote (16133)	7/4/2002 5:31:53 PM
From: TraderAlan	Respond to of 18137

Not a clue. Alan

To: KymarFye who wrote (16133)	7/4/2002 8:03:41 PM
From: TheStockStalker	Read Replies (2) \| Respond to 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 -------------------------------------------------------------------------------- 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.

To: KymarFye who wrote (16133)	7/4/2002 8:04:26 PM
From: TheStockStalker	Respond to of 18137

Tuesday March 5, 11:59 PM Hedge funds shrug off Japan short-selling crackdown By Elif Kaban LONDON, March 5 (Reuters) - International hedge fund managers say they will not be impeded by Japan's tougher trading rules effective from Wednesday as part of a broad crackdown on short selling. The measures which include the "uptick" rule -- mandating that a short sale can be made only after a stock trades higher -- will make life harder for hedge funds that are big stock borrowers and short-sellers, but won't hurt trading, they said. "We're not massively concerned," said Alex Griffiths, who runs London-based Odey Asset Management's $50 million long/short equity fund Odey Japan & General. "But this doesn't make us any more bullish on Japan. The history of markets trying to clamp down on short-selling hasn't been a happy one. It's treating symptoms rather than the cause." The uptick rule is standard practice in the United States. Prior to the clampdown, Japan was the only major country to allow short-selling freely in Asia where most markets are heavily regulated and either ban or largely limit the practice. Hedge funds have come under increasing scrutiny as global markets struggle, with German Finance Minister Hans Eichel in February calling hedge funds a threat to financial stability and urging a temporary ban on short-selling. Nick Wilson, who heads the European prime brokerage business at U.S. investment bank Lehman Brothers, said the new rules would have no impact on hedge fund managers' ability to trade. "The industry has lived with the uptick rule forever in the United States. This simply brings Japan into line with the United States," he told Reuters. Shorting stocks -- selling shares you do not own in the hope of making a profit by buying them back at a lower price -- by foreign hedge funds in particular has been blamed for a fall in Japanese banking stocks and wild fluctuations in Tokyo shares. The latest clampdown is seen as an attempt to boost shares and avoid insolvencies in the banking sector and comes in the critical period leading up to March 31 when Japanese banks close their books for the fiscal year, when many expect net losses. Ian Morley, chief executive of London hedge fund of funds firm Dawnay Day Olympia, said the uptick rule could cause a shift towards index-shorting and also make things particularly harder for convertible arbitrage funds and event-driven funds. Convertible arbitrage, among a dozen alternative investment strategies that can make big profits for hedge funds, is a strategy in which an investor buys a bond that can be converted to stock while selling short that underlying stock to take advantage of price discrepancy between the bonds and the shares. Griffiths said the Japanese government may tighten the rules further in the coming months by leaning on prime brokerers, investment banking units that are the main lenders of stock to hedge funds, and forcing them to lend stocks at higher fees. But he said so far there had been no rise in borrowing cost. "They will try to make it more expensive for hedge funds to borrow stocks. This will be an ongoing process," he said. Even if Japan bans short-selling completely, hedge funds can find ways round it by doing their over the counter trades in London and bypassing the Tokyo Stock Exchange, managers said. VILLAINS OR SAVIOURS? Managers say the Japanese clampdown reflects a demonisation of short-sellers which critics say ruthlessly exploit the market for their own end while simultaneously forcing it into a dive. They argue that far from harming markets, short-selling improves price discovery and liquidity. If anything, suspending stock lending could upset the market, they say. If hedge funds short a company or a country's currency, it is for a good reason, such as bad management, said Morley. "Governments are always happy to blame hedge funds when they are mismanaging their own economies," he said. "Hedge funds add liquidity because they're often the risk takers of the market and that is often overlooked. If you run your economy badly, then hedge funds will come in and try to short the currency. They're not the cause of the weakness." As stock markets slump, investors have been piling into hedge funds, loosely-regulated capital pools that short stocks and use borrowed money, to boost returns. But many people in Asia still associate hedge funds with the 1997 attacks on pegged currencies although most are now floating and therefore offering fewer pegged targets for hedge funds. Malaysian Prime Minister Mahathir Mohamad blamed Asia's 1997 economic crisis on hedge funds. Morley said the industry was bracing for more limits. "Going forward, it is our concern that we will see more curbs on short-selling," he said. "The politicians play to the gallery. The problem is the evil capitalists out there, rather than the governments who mismanage their economies."