Short Selling Ban Lifted
|
|
|
As of today (Friday) the ban has been lifted.
Taken from the FSA website: “The FSA will allow the ban on short selling stocks in UK financial sector companies to lapse on Friday. These changes will take effect at 00:00:01 on 16 January 2009, permitting short selling of these stocks on Friday.
For full details see: FSA Short Selling and Disclosures.
Shorting the Stock Market
Please note the article below was originally written in September 2008.
During the current phase of the credit crunch the leading banks like Barclays have been raising finance through rights issues. Whilst this is continuing to go on it is perhaps instructive to talk through the merits of short selling. For all of the fireworks over the last six months who have been the ones proved to be:
- correct, and
- truthful
Firstly, most of the Banks categorically denied they would need to raise capital. Secondly it then looked like they deliberately mislead on the size of the cash call required before finally stabbing their long suffering shareholders in the back with the ultimate climb-down. Looking at my colleagues, other financial journalists were suggesting that RBS would need no money, then around £5bn and then finally £12bn. One assumes they were being briefed by somebody.
Advert
Financial Spreads
Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see Financial Spreads.
|
The short sellers held their nerve through it all and given all the comments from the various Bank Boards at the time it would have seemed that they were wrong. If they had been wrong and were forced to cover a short position in a fast rising market that would have proved to be a very expensive mistake indeed. Even now, after the last of the big Banks has had a drink most of the stocks are still down near the lows.
Genuine long-term investors should have no fear over short selling as they are supposed to be in the game for an extended term and are buying on yield, prospects, growth etc. Why worry if investors are spread betting on a market to go down? The fact that the stock has fallen only means that they could have bought at a better price not that their long term analysis was wrong. If the real value of banking stock is at the current levels then we would have got here anyway, in the long run, without the Shorters getting involved. If banking stock is truly very cheap at the moment why are the big investors not piling in forcing the price skywards? I believe that this is a good place to be getting involved for the long term but it may be a hard road with some serious bumps on the way.
Please do not misunderstand me, whilst I am not always the biggest fan of those who defend the spread betting companies, they are not to blame. Also, this is no defence of market manipulation, the law is just as clear on Short selling as it is on Insider buying. Deliberately manipulating the market is illegal and should be punished. Unfortunately, for the past six months the rumours have proved to be true but who will punish those who denied them?
"Short Selling Ban Lifted" last update by RThomas, 16-Jan-2009
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
Similar articles:
Spread Betting on Shares - last update: 03-Feb-2012
Spread Betting on Shares - which spread betting companies offer spread betting on shares, live shares spread betting prices and shares charts, plus how to spread bet on shares and . . . read more - Spread Betting on Shares.
Financial Spreads Still Trading Whilst Trading is Suspended at the LSE - last update: 25-Feb-2011
With trading at the LSE still suspended a number of spread betting companies like Financial Spreads are still offering trading on the UK markets. Financial Spreads are also offering . . . read more - Financial Spreads Still Trading Whilst Trading is Suspended at the LSE.
Spread Bets and Factors That Can Affect Shares - last update: 17-Feb-2010
The essential underlying feature of a stock exchange is that there is generally no fixed price for any stock. A company's shares are valued by the sum of trading actions that constitute its worth over a . . . read more - Spread Bets and Factors That Can Affect Shares.
Spread Betting, Shares and Dividends - last update: 16-Feb-2010
From a company's point of view, one of the main benefits of having its shares traded on a stock exchange is that it can help to raise capital. Private companies often enter the stock market in order to . . . read more - Spread Betting, Shares and Dividends.
Oil Spreads - last update: 01-Feb-2010
Oil Spreads >> Despite the oil market being at a recent high, at the moment crude oil continues to be a dangerous market to bet against. There is room to both the upside and also the downside and the markets are very volatile at the moment. This is particularly true around the weekly oil inventory numbers . . . read more - Oil Spreads.
Spread Betting and Tax Free Trading - last update: 14-Jan-2010
Spread Betting and Tax Free Trading >> Diversification of assets, tax efficiency and opportunities in volatile markets are all key areas for many investors. Most of us could benefit from a little more research and . . . read more - Spread Betting and Tax Free Trading.
Trading the FX, Shares and Commodities Markets - last update: 14-Jan-2010
Trading the FX, Shares and Commodities Markets >> As the major economies start to stabilise and the risk of a depression fades into the distance many are reflecting on a few important points. Firstly, how did it . . . read more - Trading the FX, Shares and Commodities Markets.
Trading the Financial Markets after a Recession - last update: 12-Jan-2010
Trading the Financial Markets after a Recession >> So it looks like we have avoided a 1930's style depression however the current forecasts still suggest slow growth and a difficult time ahead. So what should you do in a difficult . . . read more - Trading the Financial Markets after a Recession.
Spread Betting Advantages - last update: 12-Jan-2010
Spread Betting Advantages >> Spread trading offers some interesting features and is worth considering as part of your investment strategy. There are many benefits. For example, spread betting profits do not incur . . . read more - Spread Betting Advantages.
Balancing a Share Portfolio for a Recession - last update: 24-Sep-2009
Of course, in reality, financial spread betting is one the few industries that is thriving in the current market conditions. There may be a temporary ban on betting on Financial Stocks to go down but you can still bet on thousands of . . . read more - Balancing a Share Portfolio for a Recession.
Short Selling Ban Lifted - last update: 16-Jan-2009
The short selling ban has been lifted. Genuine long-term investors should have no fear over short selling as they are supposed to be in the game for an extended term and are buying on yield, prospects, growth etc. Why worry if investors are spread betting on a market to go down? The fact that the stock has fallen only means . . . read more - Short Selling Ban Lifted.
Spread Betting on Construction Sector Shares - last update: 03-Nov-2008
Building Sector Shares >> Back in the summer Taylor Wimpey's inability to get a fund raiser off the ground really hit the market. At that point we had become used to shareholders routinely stumping up the cash for . . . read more - Spread Betting on Construction Sector Shares.
Shorting Leveraged Companies and the Economy - last update: 28-Oct-2008
Shorting Leveraged Companies and the Economy >> There is now some in-depth research going on with analysts looking for stocks with higher than normal borrowing requirements. The 'dodgy' gearing up of balance sheets over the past decade may . . . read more - Shorting Leveraged Companies and the Economy.
Banking and the UK Economy - last update: 20-Oct-2008
Banking and the UK Economy >> Irish banks which were virtually the first recipients of State support are now pretty much at their lowest levels. They are even under the prices that triggered the intervention in the first place. With no shorting of financial shares via . . . read more - Banking and the UK Economy.
Where to Invest During a Recession - last update: 01-Dec-2008
Where to Invest During a Recession >> With time to do nothing it seems that a large enough percentage of the population reverts back to the old vices of drink, gambling and . . . read more - Where to Invest During a Recession.
Should Investors be Allowed to Short Shares? - last update: 22-Sep-2008
Should Investors be Allowed to Short Shares? >> Looking at the Alliance and Leicester / Satander deal there has been a slightly different reaction. No one felt sorry for traders shorting via borrowing stock, placing CFDs, spread betting or otherwise. There was a lesson for everyone on the Friday that the possibility of a deal was announced. Some £150m was probably lost in just a few minutes by . . . read more - Should Investors be Allowed to Short Shares?.
The Credit Crunch and Banking Shares - last update: 19-Sep-2008
Spread Bet on Banks >> What should we do after the Lehmans crash? The FTSE 100 has already broken the 5000 support level a number of times. According to Simon Denom of Financial Spreads, 'Investors will be hoping that the bounce from this level will support the view that . . . read more - The Credit Crunch and Banking Shares.
Spread Betting on Banks - last update: 19-Sep-2008
Spread Betting on Banks >> If banks continue to maintain or even raise their already high dividends is that a 'weak signal'? The banks have sources of income other than sub-prime mortgages and, whilst growth may be difficult to come by for the next year or so, the other areas are . . . read more - Spread Betting on Banks.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
