In the midst of posting the most recent blog, we received word that the Securities and Exchange Commission’s staff has recommended reversing an earlier decision and exempt options market makers from the no short rule order issued earlier today, which went into affect immeditately.
We decided to include the notice in a new post instead of amending the old one because the order has not been officially amended and it was clear (The SEC did exempt market makers from the order for today’s options expiration) that this was not an oversight due to haste but a conscious decision. We appplaud the recommendation to amend the order but it should be noted that many longtime market experts saw “potentially disasterous” consequences from this decision. The SEC, being the regulator of this market, should have known this in the first place.
And our overall point that the focus on short selling is misplaced has not changed. Short sellers have reacted to the fundamentals in the market and as any old trader will tell you; the fundamentals will prevail in the end.
No one can dispute that we are and have been in the midst of an enourmous crisis in our credit markets and banking system. It would be beneficial if our regulators focused on the underlying weaknesses instead of searching for phantom scapegoats and propping up the very institutions that created the problem in the first place.
Tags: sanity may prevail, SEC
