moras Saturday, 03/01/14 02:31:46 AM Frontline19721 post# 69915 of 70456
Well, I have taken the time to research this out. I want to make a few points here before I state what I have determined.
First off, the NSCC has requested this rule changebecause it is no longer economically prudent to offer this service to its members. That is stated in the rule request. They claim that there is not enough business requested of them to continue this service. HUH? We all know there is a ton of shorting going on. So, what does that tell us? Market Makers, Hedge Funds, Mutual Funds and Individual Investors must have other entities that provide the same service the NSCC provided.
Secondly, there is just too much money being made by shorting stock. That in itself would create such a hew and cry, banning shorting would never fly. The money people would just not allow that to happen. And the government would not take away from themselves the tax revenue from the profits shorters make.
Thirdly, as much as we all hate the negative effects of abuse of shorting rules, the practice does have its purpose. The rule was originally allowed to promoteliquidity and order in the marketplace. As always, there were those that discovered how to use the rules to their own profit and abuses occurred. Regulation SHO was devised to curb much of the abuse. But Reg Sho only applies to stocks of companies that report to the SEC. (See Reg. SHO Rules). So, the abuses as well as the positives still exist in the Pink Sheet Stocks.
The postings here and on other boards with regard to the end of Market Maker shoring is due to poorly interpreted reading of this NCSS Notice. Shorting will go on as it has since the beginning of the stock exchange. Just not with the help of the NCSS.
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