From yesterday:
Seems like it's becoming a popular topic on today's discussion.
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http://biz.yahoo.com...elling_sec.html
Anyone have a wager on how this will effect the markets that have deviated to wildly undersold relative to max pain 2 days before expiration?
I for one believe whatever the outcome, there will be a surge in volatility and a few leveraged betters are going to be blown out of the water (as if enough
longs haven't already). Anyone think the option writers will be the ones paying out gigantic sums come friday?
WASHINGTON (Reuters) - New rules aimed against abusive naked short selling of stock in all publicly traded companies were issued by the U.S. Securities and Exchange Commission on Wednesday.
The SEC's new rules, which include a requirement to deliver a security by the settlement date, are effective on Thursday.
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"These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short selling," SEC Chairman Christopher Cox said in a statement.
Short sellers and their broker dealers are now required to deliver securities by the close of business on the settlement date, which is three days after the sale, or they will face penalties.
Broker-dealers failing to comply will be prohibited from further short sales in the same security unless the shares are pre-borrowed. That prohibition on the broker-dealer's activity will also apply to all short sales for any customer.
The SEC also adopted a rule that deems it fraudulent for customers to deceive broker-dealers about the intention or ability to deliver securities in time for settlement.
The third measure the SEC adopted requires option market makers to deliver securities by settlement date.
A "naked" short sale occurs when an investor sells stock that has not yet been borrowed.
Broker-dealers will sometimes accidentally fail to deliver stock to investors who have arranged to borrow it. If this is done intentionally, it is already illegal.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)
Edited by watchthemarkets, 19 September 2008 - 12:07 AM.
