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1/10/2013
SGX to report daily short-selling volumes
Move will alert investors and help pricing efficiency as bourse gets more transparent
By Kenneth Lim
The Singapore Exchange (SGX) will report daily short sales volumes for every counter beginning in March as it aggressively pursues leadership status in the field of risk management and transparency, the bourse announced yesterday.
In short-selling, traders borrow shares and sell them in the hope of buying them back cheaper in the future, thus profiting from a drop in the share price. With the rule, traders will have to tag as a short sale any trade in which the seller does not own the shares. SGX said it will publish daily reports on the total value and volume of short sales for each counter…quoted from the BT Premium online.
Personally I feel that allowing shorting to distort the market or value of stocks is unhealthy, undesirable and can be abused by the big boys to cheat the small traders. There must be a limit to how much stocks can be shorted to avoid market manipulation. Let there be genuine buyers and sellers and not naked shortists. It is just not right or good for the market when big boys have all the muscles to shake a market up or down.
Disclosing short selling positions is good. But this information is completely useless if the shortists could cover up their short positions by script borrowing. Scrip borrowing is a silly thing and must not be allowed except for trading errors, or if desirable, only a small limited number of short positions be allowed. Allowing shorting is already bad, naked short even badder, but nothing beats scrip lending to the shortists to destroy the value of good stocks and even the whole market with their unruly action.
If shorting is allowed, then let it be, let it be reported, and let the shortists cover their positions from the open market. Remove the scrip lending facilities. This facility should be used only for trading errors.
rb
ReplyDeleteWe need to get to the root cause of the problem facing SGX.
If all the companies listed on SGX are good quality with good management, why do we need to worry about short selling?
A good management would already have anticipated a short sellers attack.
And not put the company in danger by over-extending itself in the first place.
Growing a quality company is like growing a flower.
A flower will bloom when it is ready. And not before.
What you said ia a different issue. The thing about short selling is that for those who want to short, go ahead, and buy back from the market or be bought back by SGX. They should not have the benefit of a scrip borrowing to cover their positions for destroying the value of the scrip holders.
ReplyDeleteThey should face the market risk and market forces.
Dear scrip lenders
ReplyDeleteYou can make more money by selling your scrip to desperate short sellers who have to cover their short positions.
Naked shorts are akin to fraud because therevare no assets to back the "gamble".
ReplyDeleteProper "legal" shorting is necessary for proper market. Speculators are the true heroes of capitalism - - they have the balls to make "bets" so that we can enjoy the wonderful things in or modern industrial maket-based society. Things like: iPods, strip clubs, sports cars and guns... all mass produced to achieve a price level affordable to the masses. Modern productive industrialised market based society equal WEALTH, as opposed to those savages living in the jungles who have no capital markets, no industrialisation.
The only short selling these shiteaters do is if they capture a few pygmies and sell them as slaves ;-)
Profit and loss are the most important market signals - - it tells the operator if he made a good or not so good choice. Short sellers are there to inform the long buyers that they, those going long, have made the wrong choice, and are soon going to hand over their dough to the shorters who are speculating that they are "right" in this ZERO SUM GAME.
The freer the market, the better off we all are in the long run... the long run before we die, that is.
No problem with lending scrip lah. It's all very legal and proper. People need to cover their shorts. They have to get the assets from someshere.
ReplyDeleteThis is capitalism - - if you have something I desperately need to make filthy money to satisfy my greedy self interest, then perhaps we can do business if I come up with a sum of money to satisfy YOUR greedy self interest.
Peaceful. Free. Trade.
Actually scrip lending as not that bad as naked short. Assume A owns the scrips for Company X, and B (who does not have X shares) borrows the scrips from A to short sell. For all intent and purposes, it is similar to A selling X shares which he owns. So, why it is bad when the same X shares are sold by B (who borrows the scrips from A)?
ReplyDeleteA profits by being paid for lending the scrips. There is no guarantee that B will profit. If the share price of X goes up, B will suffer losses plus what he had to pay A for the scrip lending.
I have made my points about the silliness of scrip lending in my older posts.
ReplyDeleteA shortist is speculating, selling without having the shares. A longist can also be speculating by buying without being able to pick up. If he can't pay up when due, his position will be sold in the market.
Similarly, a shortist position should be bought in from the market. Why allow shortist to borrow scrip to cover their naked short position?
Scrip lenders are the net losers though they think they could collect a few dollars of interest when the value of their shares could be whacked down so badly that they ended as the real losers.
Matilah, what a lot of rubbish and wasting people time reading your comment. Go do what you do best lar that is sucking cock
ReplyDeleteWith or without SGX makes no difference to a lot of Sinkies, including me.
ReplyDeleteIt did wiped out the little saving that me ever had. However, that was a mistake of my own gambling and greed.
patriot
This comment has been removed by the author.
ReplyDelete@patriot:
ReplyDeleteActually it does make a difference. Capital markets are important, without the SGX or any capital market, you and I would probably not be computer owners. There would be virtually no jobs other than village life and fishing. Life would be so harsh, and the people totally exposed to the whims of nature. Most people would die in childhood.
Capital markets are necessary for modern civilization.
It is impossible to maintain 5 million people on this red dot without capital markets and the kind of human enterprises they foster.
Goods and services become the reality we can simply take for granted, as we do as bored, rich assholes. We have so much free time we can write nonsense everyday, and annoy people...just for shits and giggles.
Even if you don't participate, free-wheeling markets (and the capitalism they enable) make US ALL WEALTHIER.
Capitalism is one smokin' rockin' motherfucker which has made even the poorest of us WEALTHIER (not necessarily RICHER) than any king or emperor 400 years ago
Thank You Matilah Singapura for the tuition.
ReplyDeletePaper trade of any kind is bane. Not that me had suffered losses ftom it. It is probably due to the evolution of paper trades becoming like a game of chance as well as skillful manipulations bordering gimmick and chicanery. Put simply, it not not for simple folks like me. Paper trades are trades without physical or material production or is it me not having correct understanding of it.
Btw, if You have read me, I had expressed many times the wish to live in a less developed and hence less modern place, preferably near mountainous and cooler region.
Hopefully, me could fulfill my wish in the near future before I expire.
patriot