This page has been archived and commenting is disabled.
Germany To Ban Short Selling At Midnight, Only Naked Shorts To Be Affected
Update 4: Merkel to formally announce naked short-selling ban on Wednesday.
Update 3: Hearing naked ban will also apply to credit derivatives, i.e. naked CDS.
Update 2: Bloomberg chimes in quoting Deutsche Presse which reports that the ban will only apply to naked shorting. We are looking for official confirmation on what the final proposal will look like as there is a lot of confusion currently and no formal announcement. Regardless, investors are wondering what has changed today to institute this now.
Update: short selling ban will apply to stocks and euro government bonds according to German N-TV station. This is an act of desperation and will force all those who are long German assets to sell asap (selling is still legal).
Reuters headline for now, that the German Finance Minister will institute a short-selling ban at midnight. If true, this is huge, as it means the market will become massively dislocated once again. We can show charts of how Thailand, US and Greek markets reacted when this was introduced (short jump followed by significant slide lower), but you get the image. One wonders just how horrible the news flow over the next 24 hours will be for this drastic measure to be introduced.
Full and most recent Reuters update below:
BERLIN, May 18 (Reuters) - Germany plans to ban naked short-selling on stocks and euro government bonds, German all-news network N-TV reported on Tuesday.
German coalition sources told Reuters earlier that Finance Minister Wolfgang Schaeuble plans to ban short-selling from midnight.
Economy Minister Rainer Bruederele told Reuters that it was possible the short-selling ban would be quickly enacted.
No other details were immediately available.
»
- 27454 reads
- Printer-friendly version
- Send to friend
- advertisements -
so whats the fucking problem. everyone is harumphing and punching their chest about the need to ban naked CDS and when it finally happens everyone starts bitching. make up your minds ffs and hold your conviction on the matter.
Right! It's not as if they are banning ownership of gold, the Dollar, and most definitely the Yen:
http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChartPopUp.aspx?symbol=EURJPY|netdania_fxa&name=EUR/JPY
GS down $4.
Chalk me up as one who's never been opposed to naked CDS.
The really weird thing is that they may be messing with futures and repos. These are such vanilla instruments in managing IR and liquidity risk that it seems very surprising they are cracking down on these as well. I don't think the consequences are easy to anticipate.
I told you all we would see EUR 1.20 this week. She is about to implode below 1.22 today. Something bad about to be announced IMO, probably the bailout needing a bailout of which Tyler touched on a few days ago.
I pegged it at 1.20 on Monday for the date of the 24th. so close
oversold market; if anything this should skyrocket the EUR. fear and panic reaction.
pussy ass FX bitches.
Maybe Germany will spare us and immediately announce their pullout from the EuroZone and revive the DM.
Now THAT would be good theatre!
Does the naked shorting apply to gold futures? Maybe they need to add a clause into this law that essentially states, "naked short selling of things we want to go down, like oil, gold, etc., is acceptable. Shorting of things we want to go up, is not."
Given that this ban is German-specific, I would suggest that the cause is at least German-related. I'm thinking this is specifically a large German bank. Even more specifically, Commerzbank.
What I'm guessing more specifically is that a big portion of their earnings is in net interest income, and if that number were to be substantially revised/updated and presented at their annual meeting tomorrow, that would be something significant as far as disruption.
Goldman Sachs comes out today bullish (or buy dips anyway) on the Euro.
GS no longer allowed to create synthetic credit default swaps shorting the euro.
Coincidence?
There is certainly no moral hazard whatsoever in moving the goalposts willy nilly.
My gf is refusing to take off her shorts :((
Wanted to say a quick thanks for all the insights...
So, if this is part of the Wolf Pack defense, they are really after the bond and CDO 'manipulation'. I wrote yesterday that the IBs and hedgies had the G7 governments right where they wanted them: just walk down the Euro every day while buying upside protection, wait for the panic intervention and unwind. Presto, 5% profits every day on close to infinite volume.
This looks to be an attack on that mechanism. Now the only people who can effectively attack the Euro must first have accumulated large inventories (owned or borrowed). Not exactly the MO of most hedge funds, who are allergic to warehouses full of inventory.
Desperation, yeah no doubt. An effective strike though.
I don't see why holders of German debt would have to sell on this. That is important so other views please.
And yes, please do ban naked shorts on commodities. That is downright hilarious. But let's go further and simply ban commodity hedging....LOL...watch the whole energy and ag sectors have a seizure and wait till you see your electric bill in a year or so...
May 2010 19:07 BST *DJ German MOF: Short-Selling Ban On Shrs Of 10 Leading Fincl Institutions
(MORE TO FOLLOW) Dow Jones Newswires
May 18, 2010 14:07 ET (18:07 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
18 May 2010 19:07 BST *DJ German MOF: Ban Also Applies To CDS On Euro Govt Bonds
(MORE TO FOLLOW) Dow Jones Newswires
May 18, 2010 14:07 ET (18:07 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
18 May 2010 19:07 BST *DJ German MOF: Govt Also Plans Ban On Naked Short-Selling Of All German Shrs
(MORE TO FOLLOW) Dow Jones Newswires
May 18, 2010 14:07 ET (18:07 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
18 May 2010 19:07 BST *DJ German MOF: Also Plans Ban On Naked Short-Selling Of Derivatives In Eurozone
(MORE TO FOLLOW) Dow Jones Newswires
May 18, 2010 14:07 ET (18:07 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
18 May 2010 19:07 BST *DJ German MOF: Govt Also Eyes Ban On Euro Derivatives That Don't Hedge Vs FX Risks
(MORE TO FOLLOW) Dow Jones Newswires
May 18, 2010 14:07 ET (18:07 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
maybe this is what gregor gysi was hinting about?
r
If I were merkel and about to issue DM's this sort of thing makes a great deal of sense
My local banker promised I could have my gold in two days. She said she's seen a lot more demand for it lately "due to the financial crisis." At the time she said that, this had not yet been announced.
I didn't realise we had officially entered the next financial crisis already .... guess this confirms it.
Maybe we should outsource the SEC and hire the Germans. They seem to be the only ones with the gumption to "try" to reign in derivatives, even if done pathetically......
I thought you were supposed to ban naked shorting AFTER you killed something big. Or did something BIG just die all on it's own.
As I said earlier: THis is just code for Central Bank intervention in markets. Not just naked shorts.
Just like in the US markets in beginning in August 2008 when our "Naked Short Ban" started. It was code for coordinated Fed interventions in the markets, culminating in giant short squeezes in shares of major banks in March 2009 (not naked shorts anymore).
Germany engineered short squeezes in Volkswagen in 2008. They will do it again with their financials.
ECB and Fed are trying a controlled devaluation of the Euro, without the benefit of an international accord, which will piss off China. It also has the risk of just turning into a competitive devaluation versus USD and GBP. Just like during the Great Depression.
It's an engineered haircut for bondholders. Dollar swap lines ensure that ECB can buy back debt in devalued Euros. It's still going to monetize debt, however.
Hey, what's going on, we need to know if it concerns naked shorts or just plain ol' shorts?
Forgive my ignorance but wouldn't it be better to make Naked shorting illegal or at least enforce current laws (if any) on this.
Again, it's code language. It's a signal that the government will put its foot down and intervene in markets.
How did Spain's bond auction go today? Any news on that?
http://www.forbes.com/feeds/ap/2010/05/18/business-eu-spain-financial-crisis_7614123.html?boxes=marketschannelwires
The 12 month was particularly telling.
SEC thinks about 5 min halt if stock moves more than 10% in 5 mins
How about a 5 min halt if it goes up 10 % in 5 mins?
Euro/$ now 1.217 and sinking
Huhn Wenig (Chicken Little's German cousin):
Mein Gott! Mein Gott!
The Euro is falling! The Euro is falling!
A short sale is still an act of selling. If all shareholders of a stock, be they the standard long sellers or short sellers, suddenly start to sell, the stock is going to fall in price.
http://www.financeandmarkets.net/short-selling-stocks.html
sophai binoria
You Have A great blog right here Mate. Adore your articles or blog posts Quite informative, Please Hold Up the great work.
bedrift
Very good info that is presented in this post. I prefer to read this kind of stuff.Thanks for your kind support.
It is very happy to write comment on this blog really you had provided very informative post in this blog. Really it had made me know something today. Thanks for the stuff which made me realized some thing.
dejar de fumar