" At issue are short sellers, traders who sell borrowed shares, betting they can replace them later with shares bought at a lower price. "
" Critics say short sellers, with the aid of brokerage firms, cause these delivery failures by shorting stocks without first borrowing shares, as required by securities law. Such activity drives down stocks by adding to the selling pressure. " ...
" Brokerage firms "have made huge amounts of money" facilitating short selling, said Mr. Chepucavage, general counsel for Plexus Consulting Group, a Washington firm that advises nonprofit firms and broker-dealers. "They want and have argued strenuously for flexibility." "
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http://www.thestreet.com/story/10482637/1/uptick-rule-showdown-coming-wednesday.html
" The uptick rule, created by the SEC in 1938 following the Great Depression, said that the short selling of stocks could be done only after the share price "ticked" higher above the prior sale. The rule was designed as a guardrail that slowed down the short selling process, preventing short sellers from driving the price of a stock lower at a faster clip.
In a short sale, an investor borrows stock from a broker, sells it, and tries to buy it back at a lower price later before returning it to the original lender. The difference in the transactions is kept as a profit. "
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