NEWS

Comments to the EU public consultation paper on short selling can be viewed at:
http://circa.europa.eu/Public/irc/markt/markt_consultations/library?l=/financial_services/securities_selling&vm=detailed&sb=Title .

Researchers at Ohio State (Michael S. Drake) and Texas A&M Universities (Lynn L. Rees and Edward P. Swanson) examined the value of short sellers in guiding investment decisions ( “Should Investors Follow the Prophets or the Bears? Evidence on the Use of Public Information by Analysts and Short Sellers” ). They find:
“First, [...]

Gary Weiss writes in The Globe and Mail (August 27, 2010, “Short Selling Isn’t That Bad” ), “The problem with the anti-short crusade is that the shorts are rarely the cause of widespread fear and panic. The shorts like to portray themselves as truth tellers who expose excessive valuations, fundamental weaknesses and blatant fraud in [...]

Fan Junli and Zhao Jingting report (August 18, 2010) that “Caixin has learned that a long-awaited mechanism for broader securities lending products may be approved by regulators within six months, widening the market for margin lending and short selling.
“At an Aug. 13 meeting, officials from government supervision departments and funds companies discussed a variety [...]

In comments on the EU staff consultation on short selling , the Interntional Montary Fund weighs in with strong evidence to show that restraints on short selling have harmed markets.
1. No strong evidence that SS led to falling prices. “Evidence suggest that most of the adverse market movement in the current [...]

Bloomberg correspondent Rainer Buergin (August 17, 2010)
reports that the International Monetary Fund concluded that “Germany’s unilateral ban on some kinds of naked short-selling failed to achieve the government’s aim of keeping asset prices from falling and succeeded only in impeding markets.
“Market efficiency and quality in fact deteriorated substantially following the introduction” of short-selling bans in [...]

SIFMA has created a database of the expected rule-making under the new law.

A Congressional Research Service report discusses the Dodd-Frank Act that Congress approved and the President signed into law in July. The report discusses Title IV of this act, which creates new registration and reporting requirements for private fund advisers. The report also covers the SEC’s past rules requiring hedge fund advisers to register with the agency and the appeals court decision that struck that regulation down.

Data Explorers’ long-short ratio stands at a two-year high, with equity short selling significantly below levels seen two years ago. “At just above $630bn, equity short selling is somewhat short of April’s peak of $800bn, which coincided with the peak in global equities,” the firm’s press release (July 26) reported.

Singapore Management University Finance Professor Melvyn Teo argues that the European Union’s proposed hedge fund rules (Alternative Investment Fund Managers Director) will “hurt the very hedge fund investors [the EU regulations] were designed to protect.”
In his essay (“EU Hedge Fund Rules May Hurt Investors,” July 28, Business Times), Teo outlines three areas where EU [...]