Post by jannikki on Jan 26, 2006 18:48:47 GMT -4
Regulators Say Reg SHO is Working
Tuesday January 24, 2:02 pm ET
NEW YORK--(BUSINESS WIRE)--Jan. 24, 2006--Despite extensive examinations by the SEC and the markets, there has been little or no evidence of extensive "naked short selling" to date, according to comments made at a recent forum held by the North American Securities Administrators Association (NASAA).
The forum was designed to examine how well Reg SHO, a regulation designed to modernize rules on short selling, had performed.
James Brigagliano, assistant director of market regulation at the SEC, said, "While there may be instances of abusive short selling, 99% of all trades in dollar value settle on time without incident."
Brigagliano said the SEC conducted examination at 45 broker/dealers and asked the markets to look into the trading of securities in which large amounts of "fails to deliver" have been registered.
Anand Ramtahl, vice president in the New York Stock Exchange's division of member regulation, told panelists that the exchange was conducting rigorous examinations of its members to make sure they are complying with Reg SHO.
NYSE officials noted later that when Reg SHO went into effect in January 2005, the exchange had 78 issues on the threshold list. (The threshold list contains the names of issues that have more then one-half of one percent of their shares failing to be delivered.) As of early January 2006, the number of NYSE issue on the list had dropped to 37 issues.
Cameron Funkhouser, NASD's senior vice president of market regulations, told the forum that NASD had found no evidence of rampant naked short selling. He also noted that although a number of companies have in the past alleged their shares have been manipulated through the listing of their stocks on foreign stock exchanges, he had found no evidence of such activity.
"We took (these allegations) very seriously," Funkhouser said. "We have seen not one instance of naked short selling or any abusive short activity" through foreign exchanges."
According to the SEC, a short sale is "generally the sale of a stock you do not own (or that you will borrow for delivery). Short sellers believe the price of the stock will fall, or are seeking to hedge against potential price volatility in securities that they own. In a 'naked' short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due, which is known as a 'failure to deliver' or 'fail.'" The SEC noted that fails can occur for a number of reasons other than naked short sales, however.
The Depository Trust & Clearing Corporation was not invited to attend the NASAA forum, but officials noted that 85% of all fails were resolved within 10 business days (i.e., before any buy-in would be allowed under current rules), and 90% resolved in 20 business days. DTCC does not regulate short selling, naked or otherwise. However, it compiles lists of fails each day and provides that data to the market regulators.
Additional information on naked short selling can be found on DTCC's Web site at www.dtcc.com/ThoughtLeadership/keyissues/naked_short_ selling.htm.
(Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)
About DTCC
Through its subsidiaries, DTCC provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for almost 2.5 million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.
Contact:
The Depository Trust & Clearing Corporation
Stuart Z. Goldstein, 212-855-5470
sgoldstein@dtcc.com
--------------------------------------------------------------------------------
Source: DTCC
biz.yahoo.com/bw/060124/20060124005947.html?.v=1
Tuesday January 24, 2:02 pm ET
NEW YORK--(BUSINESS WIRE)--Jan. 24, 2006--Despite extensive examinations by the SEC and the markets, there has been little or no evidence of extensive "naked short selling" to date, according to comments made at a recent forum held by the North American Securities Administrators Association (NASAA).
The forum was designed to examine how well Reg SHO, a regulation designed to modernize rules on short selling, had performed.
James Brigagliano, assistant director of market regulation at the SEC, said, "While there may be instances of abusive short selling, 99% of all trades in dollar value settle on time without incident."
Brigagliano said the SEC conducted examination at 45 broker/dealers and asked the markets to look into the trading of securities in which large amounts of "fails to deliver" have been registered.
Anand Ramtahl, vice president in the New York Stock Exchange's division of member regulation, told panelists that the exchange was conducting rigorous examinations of its members to make sure they are complying with Reg SHO.
NYSE officials noted later that when Reg SHO went into effect in January 2005, the exchange had 78 issues on the threshold list. (The threshold list contains the names of issues that have more then one-half of one percent of their shares failing to be delivered.) As of early January 2006, the number of NYSE issue on the list had dropped to 37 issues.
Cameron Funkhouser, NASD's senior vice president of market regulations, told the forum that NASD had found no evidence of rampant naked short selling. He also noted that although a number of companies have in the past alleged their shares have been manipulated through the listing of their stocks on foreign stock exchanges, he had found no evidence of such activity.
"We took (these allegations) very seriously," Funkhouser said. "We have seen not one instance of naked short selling or any abusive short activity" through foreign exchanges."
According to the SEC, a short sale is "generally the sale of a stock you do not own (or that you will borrow for delivery). Short sellers believe the price of the stock will fall, or are seeking to hedge against potential price volatility in securities that they own. In a 'naked' short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due, which is known as a 'failure to deliver' or 'fail.'" The SEC noted that fails can occur for a number of reasons other than naked short sales, however.
The Depository Trust & Clearing Corporation was not invited to attend the NASAA forum, but officials noted that 85% of all fails were resolved within 10 business days (i.e., before any buy-in would be allowed under current rules), and 90% resolved in 20 business days. DTCC does not regulate short selling, naked or otherwise. However, it compiles lists of fails each day and provides that data to the market regulators.
Additional information on naked short selling can be found on DTCC's Web site at www.dtcc.com/ThoughtLeadership/keyissues/naked_short_ selling.htm.
(Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)
About DTCC
Through its subsidiaries, DTCC provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for almost 2.5 million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.
Contact:
The Depository Trust & Clearing Corporation
Stuart Z. Goldstein, 212-855-5470
sgoldstein@dtcc.com
--------------------------------------------------------------------------------
Source: DTCC
biz.yahoo.com/bw/060124/20060124005947.html?.v=1