When the ALP Regulates

GroceryWatch, FuelWatch, and now we have StockWatch

On Friday Rudd said that Australia wouldn’t be changing short selling laws. He must have changed his mind as he was waiting while they were fueling up the Boeing business jet on his way to NYC. This weekend ASIC banned all forms of short selling promising to review the ban in 30 days. Rudd must have looked to Russia for inspiration as they are the only market that have imposed a complete ban.

This has caused outright confusion in the market. Funds that carry out sector trading for instance will have to close their positions. These are funds that strategize long/short positions between various industry sectors to extract relative value.

Amusingly offshore funds that are not regulated by ASIC can still short the market and will simply pay the equivalent of a parking fine.

Outright confusion breeds well errr, outright confusion. Market makers remain unsure if they are allowed to  provide liquidity to clients by facilitating trades which necessitate he creation of a short positions at times.

Furthermore Rudd has now placed the Australian market in focus by suggesting we have something to hide with such draconian measures which may not be the best thing to do in skittery markets.

Good one guys.

Update:

Under Rudd we now have Stockswatch seeing bear marlkets are now illegal. I wonder if he’s going to run a website with a basket of sector stocks. LOL

Anyone suggesting Rudd and Swan are comparable to Howard and Costello as far as finance goes…. ” there’s little light between the big parties” needs a brain MRI

14 thoughts on “When the ALP Regulates

  1. The confusion seems to be over the word ‘laws’. If he can act over the weekend, then the laws must already give him sweeping powers to interfere in the markets- maybe they assumed he wouldn’t act, which was foolish of them.

  2. I think as late as Friday Dudd was saying they weren’t going to do anything.

    Not only did that change on the weekend, but they have imposed the most stringent rules in the West.

    The idiots don’t really understand what they have done. Now seeing there are no shorts a poorly performing stock will totally tank. Previously shorts would have provided liquidity when a stock was down as they bought to cover. That won’t happen now.

    These clowns have stolen defeat from the jaws of victory.

    Costello would never have gone for this shit as he would have seen it for what it is. Outright stupidity.

  3. I don’t know what authority ASIC relied on to ban short selling. I thought the ASX regulated the market unless it involves the Corporations Law, which short selling doesn’t.

  4. David the story doing the traps is that ASIC was totally against the idea, however Dudd and Swan overruled them. The story is that the two mutton heads thought that’s what the punters wanted and it would be a politically astute move.

    If this is true both these idiots need to be dumped at the first opportunity.

    It’s such a stupid decision that i can’t begin to know how to criticize it.

    There’s quite a large healthy convertible arb market. The strategy is that allows people to play the conversion ratio against the underlying stock. The market absorbed a good part of liquidity through this sector and it was very useful. Those two geniuses have now closed it down destroying a good part of liquidity in its wake.

    [snip]

  5. I think its a case of “me-too.”

    The Americans banned it so it must be alright. Afterall, America is a *cough* capitalist country run by a *cough* *splutter* economic conservative President.

  6. ED
    The banned naked shorting in financial stocks. That’s bad shit in itself. These guys banned all short selling for domestic players. Now only foreigners can short. You can still short through CFD’s though and i-banks are creating synthetic shorts for clients, but these are expensive

    These two bozos- Dudd and Swan- don’t know what they’re doing.

    There’s no floor next time a firm presents a bad result. The stock will just crater and keep going.

  7. How is the ban established? That is a good question. Does the ASIC have the power to ban a market practice just be diktat?

  8. an interesting side story of the ban; apparently it was Macquarie who lobbied hard for ASIC to impose a blanket ban on short selling. however, they made sure that their own market makers were exempted.

    hence Macquarie can short the shares of whoever they like but no one can short their shares 🙂

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