“To provide clarity about the future expiration of these actions, the Commission is announcing that each of the emergency orders issued on Sept. 17 and Sept. 18, 2008, will be extended to allow time for completion of work on the anticipated passage of legislation.”
The US Senate passed the vote on the Economic Stabilization Act late on Wednesday evening (74-25) and the legislation will be put to vote by the US House on Friday, October 3. Although the Senate passage seems to have given the legislation “legs”, the SEC has extended the short selling ban until the end of the day, October 17th.
“This order will also be extended, to 11:59 p.m. ET on Oct. 17, 2008, but the Commission intends that the order will continue in effect beyond that date without interruption in the form of an interim final rule. The Commission will seek comments on all aspects of the anticipated rulemaking.”
60% of asset managers, pension plans and large companies surveyed are in favor of short selling
A study released this week by Greenwich Associates surveyed 905 asset managers, pension plans and large companies around the world on the emergency ban on short selling. The survey showed that 60% of the respondents believe that short selling of financial stocks should be allowed. Within the survey 45% of pension funds backed investors ability to short sell financial stocks, large corporations were overwhelmingly against it and in support of the ban.
The emergency short selling ban was seen by many as a direct assault on the hedge fund industry, which makes heavy use of the strategy. “Basic convertible arbitrage strategies entail short-selling and many of the new convertible bonds issued in the United States in the past year have come from financial service companies whose stocks are now off limits for shorts,” said Karan Sampson, Greenwich Associates Director...
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