SEC bans short-selling in 799 financial stocks

SEC has now banned short-selling in stocks of 799 financial companies. List of banned stocks is here. SEC statement says that it has taken these steps in coordination with FSA. FSA has banned 29 stocks from short-selling. List of stocks is here

SEC’s ban ends on 2 Oct 2008 but FSA’s is a longer ban till 16 Jan 2009. FSA statement says:

“While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector.”

This is a classic case of repugnance good and short-selling being limited to only text-books. When prices rise and are seen to be away from fundamentals, all say it is very difficult to say what is the fundamental price. Hence bubbles are ignored and preference is being given to markets to correct the excesses. However, when they fall, we see such reactions.

Why not some ban on long buy when prices are rising like they are falling now? Then most financial players will cry foul, socialism etc. However, now players will say this is needed as markets are irrational etc.

I hope now the experts in India don’t say such things don’t happen in developed financial systems. Or cry foul when such decisions are taken in India……when developed economies can’t afford short-selling in times of distress, it is too much to ask emerging markets to fact the music.

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7 Responses to “SEC bans short-selling in 799 financial stocks”

  1. » sec short selling list » sec short selling list Says:

    [...] SEC bans short-selling in 799 financial stocks 4 hours ago [...]

  2. » sec short selling list Says:

    [...] SEC bans short-selling in 799 financial stocks 4 hours ago [...]

  3. investing-finance.info- » sec short selling list Says:

    [...] SEC bans short-selling in 799 financial stocks 4 hours ago [...]

  4. Nessie Says:

    Thanks. Good piece, including the list of stocks. Newspapers don’t seem to be publishing the list of 799 stocks.

  5. Morgan Stanley praises, hedge funds disposes « Mostly Economics Says:

    [...] Stanley praises, hedge funds disposes I had posted that short-selling has been banned in select stocks in US and UK. FT Alphaville posts updates the [...]

  6. Emergency Economic Stabilization Act of 2008 « Mostly Economics Says:

    [...] after a ban on short-selling (see this as well), they are considering suspensions on mark to market as [...]

  7. Have Short-selling bans helped? « Mostly Economics Says:

    [...] the policy responses of various countries on short-selling in this crisis (see this) [...]

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