SEC To Seek Comments On Proposed Short-Sale Rules

[depakid]

(At least we're starting to see some attempts at regulation).

U.S. securities regulators are questioning whether investors would be able to undermine potential short sale restrictions through other financial instruments such as swaps and some types of exchange traded funds.

On Wednesday, the Securities and Exchange Commission proposed five short sale restrictions, including bringing back an uptick rule, which would allow investors to bet that a stock will fall only when the last sale price was higher than the previous price.

In the SEC's formal proposal, released on Friday, the agency asked for comment on whether an investor's ability to obtain a short position through products such as options and other instruments such as "inverse leveraged exchange traded funds" could undermine its proposed rules. This is a similar concern raised by SEC Commissioner Luis Aguilar earlier this week, who said that investors could move their shorting activities to unregulated products such as credit default swaps.

"Even if we were to adopt a rule restricting short sales, that rule would be, at best, only a partial solution," Aguilar said at the SEC's meeting on Wednesday. Short selling has been blamed by some lawmakers and executives for deepening the financial crisis and driving down share prices. But traders and asset managers say short sellers are being targeted unfairly for the plunge in stock prices that occurred as the housing market bubble burst and exposed risky bets by financial institutions.

Another SEC proposal would allow shorting only if the best available bid on a stock was higher than the last bid. The SEC also proposed three circuit breakers, which would trigger some kind of short sale restriction if a particular stock fell by 10 percent.

More: http://uk.reuters.com/article/companyNewsMolt/idUKTRE5392M420090410?sp=true

[Skink]

1. Implement the transaction tax.

Then see what happens.Or maybe implement a transaction tax only for short sellers and a hefty one at that.

[depakid]

2. Both a transactions tax (as in the UK) and a Tobin tax on forex

would go a long way toward paying for oversight and bailouts.

Let’s start with a fairness point. Why should you pay a 5 to 6 percent sales tax for buying the necessities of life, when tomorrow, some speculator on Wall Street can buy $100 million worth of Exxon derivatives and not pay one penny in sales tax?
Let’s further add a point of common sense. The basic premise of taxation should be to first tax what society likes the least or dislikes the most, before it taxes honest labor or human needs.

In that way, revenues can be raised at the same time as the taxes discourage those activities which are least valued, such as the most speculative stock market trades, pollution (a carbon tax), gambling, and the addictive industries that sicken or destroy health and amass large costs.

So, your member of Congress, who is grappling these days with gigantic deficits on the backs of your children at the same time as that deep recession and tax cuts reduce revenues and increase torrents of red ink, should be championing such transaction taxes.

Yet apart from a small number of legislators, most notably Congressman Peter Welch (Dem. VT) and Peter DeFazio (Dem. OR), the biggest revenue producer of all—a tax on stock derivative transactions—essentially bets on bets—and other mystifying gambles by casino capitalism—is at best corridor talk on Capitol Hill.

There are differing estimates of how much such Wall Street transaction taxes can raise each year. A transaction tax would, however, certainly raise enough to make the Wall Street crooks and gamblers pay for their own Washington bailout. Lets scan some figures economists put forth.

More (gasp) from: http://www.nader.org/index.php?/archives/2101-Tax-The-Speculators.html

[jesus_of_suburbia]

3. "implement a transaction tax only for short sellers" ..... THIS

I agree.

[FrenchieCat]

4. Oh, they are getting started alright.....

If anyone has any doubts, just watch and see.

It won't be easy, and they will squeal, but it will be done.

[depakid]

5. One would like to think so