Ban On Short Sell

On September 19, 2008, David Goldman, the staff of the US Securities and Exchange Commission (CNNMoney.com), reported that the US Securities and Exchange Commission (SEC) temporarily banned securities of short-selling financial companies . This action was seen as a defensive strategy to help stabilize the transactions of 799 financial companies designated by the ban. The US Securities and Exchange Commission considers that short sellers that prohibit short selling by manipulating the stock price of a particular company will restore regularity of the market (Goldman, 2008).

Regulatory changes since 2008: updated SEC requirements, temporary ban on short sale, Dodd-Frank law (new regulatory authorities, bank order plans), replacement of FSA with PRA and FCA in the UK, regulation beyond the internal model Capital requirements Capability is even greater. Strategies to Maximize the Strategic Alliance's Benefit: The alliance can only be formed with the best option (best to achieve a specific goal without full integration) and finds the right alliance (team is potential You should evaluate the other party). Fully monitor the progress of the alliance (adequate resources, regular refocus)

Due to the threat to the viability of financial institutions, the fact that the competent authorities of several Member States have taken emergency measures to restrict or prohibit short selling of some or all securities is in accordance with Rule 236 / It is clear from preamble 1 of 2012 issue. And this was also pointed out at the meeting because the lack of a specific common regulatory framework for the EU to monitor the short sale, as well as the measures taken by the member countries, also differ, resulting in different systemic risks.

A discussion on how to solve the crisis and prevent the next crisis suggested that policy makers should prohibit short selling and impose transaction tax on shares. I think these two are not good ideas. First, because short selling brings new information to the market, enhances liquidity and reduces bubbles (remember the real estate bubble began to crisis), preventing it is very expensive . If there is a risk of looting transactions, it is reasonable to temporarily prohibit new short selling by financial institutions. (Please refer to here for the mechanism of short sale.)