More transparency in the stock market

I must applaud the move by SGX for improving transparency in the stock market by reporting on the number of short sell positions in each trading session. Though this is not something new as other exchanges have been doing so, it is still a step forward in the name of greater transparency.

Transparency must be good for everyone. For one, investors can have some knowledge of the number of short positions in the stock market the day before. Traders and investors could now have a bit more information on what others are doing and how many stocks are being shorted.

There are two misgivings though. While shortists would have to indicate their short positions, there is no way to know how many of these positions are covered in the same day. Thus the balance open position is still a mystery to the traders and investors looking at the SGX report. The information is at best incomplete or giving a false picture of outstanding short positions. The second misgiving is that the report only comes out the next day, after the trading session is over. So there is really not much that the traders and investors could do except for a little hindsight of what had happened the day after.

Now things would be quite different if one is a big trader or fund that has access to super computers that are plucked into the SGX system. Such computers would not only now able to see how many buyers and sellers of a stock, of every stock in the market, it will now be able to see who is shorting and whether the positions are covered back when shortists have to indicate their sell positions. If only I were to be able to get hold of such a computer to peep into the trading activities in the market, would I therefore be able to capitalise on the sensitive information that the normal traders or small investors would not have and take advantage of it? Would the super computers be telling the big fund managers that such and such a stock has a big short position and not covered, and the fund could then do the necessary to reap an easy profit all because the shortist’s position is now in the open, open knowledge to the super computers only?

If a fund manager is privy to such sensitive information and takes advantage of it, would it be a violation of the stock exchange rulings for insider trading or unfair practices vis a vis other investors and traders? I am not sure how much information the big funds and traders have with their super computers plucked into the SGX system and whether they are really playing an unfair game, playing in an unlevel playing field?

Who knows, or is there anyone out there that can give a clearer picture of what is going on, what is happening, what advantages did the super computers give to their operators? With short selling now in the open in the name of transparency, can there also be more transparency as to the capability of the super computers, what are they doing and what advantages do they have against those trading without super computers?