Financial Watchdog Hits The Short Sellers
While there are many people who dislike those market dealers who sell shares they do not own with the intension of buying them back when they fall, they have always been part of the market. Even though many see them as a form of market abuse they are actually a natural part of find a level for any share price. However, the FSA has stepped into the row and announced plans to force ‘shorters’ to disclose positions of more than 0.25% in any one share in which a rights issue is ongoing.
The move comes into play from the 20th June and while some will applaud the change, there are many who feel the FSA are looking to support the ongoing banking sector rights issues, many of which are rumoured to have been the target of short sellers. It also seems that many shares which have ongoing rights issues seem to be particularly vulnerable to rumours and counter-rumours, much like we have seen in the banking sector over the last few weeks.
It will be interesting to see if the ‘shorters’ curtail their operations or continue to hit weaker shares even though large scale actions will be announced to the market.
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