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Ban on shorting Irish financial stocks

  • 23-04-2010 10:28pm
    #1
    ifconfig
    Registered Users, Registered Users 2 Posts: 880 ✭✭✭


    I'm not sure if this has come up for a while on this forum but...

    Is it correct to say that the ban on shorting Irish financial stocks has not been lifted ?
    It was originally imposed by the regulator here in mid Sep 2008 following the turmoil in the markets and the carnage on financial stocks at that time.
    A similar UK ban expired on Jan 16th 2009 . Some additional rules on requiring the disclosure of short trades were retained for an additional 6 months.
    In the US the ban was imposed in Sep 2008 for a period of 3 weeks and Bernanke according to information in this article later changed his mind and considered the ban/restriction unproductive (in hindsight).

    Isn't short selling meant to be a part of efficient market theory , etc ?

    Is Ireland the only remaining Western economy whose stock market continues to impose these restrictions.

    I've no truck with short sellers ... I just find it extraordinary (if it is the case) that 18 months on we still have such restrictions.
    Obviously this works at the same pace as the slowest bank recapitalization process in the world.


Comments

  • #2
    northwest100
    Closed Accounts Posts: 171 ✭✭northwest100


    if naked short selling is good for the market (as some shady people have tried to argue), lift all regulations now and let everyone do it...not just stock traders, allow anyone to do it -- let's see how long this "efficient" system would last.

    nobody has to work anymore, nobody has to produce anything, just borrow monopoly money from banks at 0% interest, gamble away...everyone's a winner.


  • #3
    ifconfig
    Registered Users, Registered Users 2 Posts: 880 ✭✭✭ifconfig


    northwest100 wrote: »
    if naked short selling is good for the market (as some shady people have tried to argue), lift all regulations now and let everyone do it...not just stock traders, allow anyone to do it -- let's see how long this "efficient" system would last.

    nobody has to work anymore, nobody has to produce anything, just borrow monopoly money from banks at 0% interest, gamble away...everyone's a winner.

    Agreed on naked short selling but aren't the restrictions imposed on ISEQ quoted financial stocks much more restrictive than just banning the naked short sellers ?

    I understand the argument for allowing short sellers in a marketplace is for better price discovery


  • #4
    northwest100
    Closed Accounts Posts: 171 ✭✭northwest100


    just banning the naked short sellers

    I honestly don't know, ifconfig.

    There doesn't seem to be a total ban, just a restricted list according to this article.

    "Bloomberg accurately shows the companies placed on the Irish Regulator's restricted list, namely Allied Irish Banks, Anglo Irish Bank Corp, the Governor & Co of the Bank of Ireland, and Irish Life & Permanent PLC"

    What's the current price of Irish bank shares? probably very little now.

    BOI stock was valued at ~€98 each in Feb 2007 down to ~€1 2 years later --almost worthless.

    If you had known in Feb 2007 shares of BOI would be €1 in 2 years, imagine the money you'd have now from short selling BOI stock.

    Maybe the Irish government wanted to limit the damage?


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