• Sprott Money
    05/26/2016 - 05:58
    How many “emergency” “secret” meetings do the central planners around the world need to have before the citizens of the respective countries begin to fully understand and take notice that something...

Hedging Europe's Short-Selling Ban (Again)

Tyler Durden's picture


While repeating the same thing and expecting a different result is the definition of insanity, the Italian and now Spanish regulators, in their wisdom, have banned short-selling once again (supposedly not just on stocks but OTC derivatives also) - because, of course, this is all speculation and not just real money exiting the increasingly encumbered 'bail-in-able' worst banks in the world. When will the long-selling ban begin and what does this S-S ban mean? Very little in reality - within a few days of the last ban, following a very short-term squeeze - European banks were back below the pre-short-sale-ban level as we noted here and here. The trouble with the ban is that managers will look to hedge the implicit stress that this means those banks are under (that may otherwise be manipulated out of the price). How to do this? Well, last time, it was Morgan Stanley that was the most correlated on the way down and was the worst performer immediately after the ban began - and this time seems like it should be no different. Already in the pre-market, MS is -4%, notably underperforming its peers.


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Mon, 07/23/2012 - 09:00 | 2642101 GetZeeGold
GetZeeGold's picture





Mon, 07/23/2012 - 09:07 | 2642123 idea_hamster
idea_hamster's picture

Who wants to bet we rip in the last 0:30 to close at Friday's VWAP?

Mon, 07/23/2012 - 09:20 | 2642178 Vince Clortho
Vince Clortho's picture

This is a given.  That dildo that runs the PPT is one of the few entities left in the "market".

Mon, 07/23/2012 - 12:41 | 2642992 MillionDollarBoner_
MillionDollarBoner_'s picture


The PPT is the market :O)

Mon, 07/23/2012 - 09:03 | 2642110 DoChenRollingBearing
DoChenRollingBearing's picture

This is as good a time as any to push the AMF button...

Get out now!

Mon, 07/23/2012 - 09:33 | 2642231 StychoKiller
StychoKiller's picture

Guys, NEVER press the ATM (automatic tampon remover) button!:>D

Mon, 07/23/2012 - 09:35 | 2642233 Stock Tips Inve...
Stock Tips Investment's picture

Governments in desperate times, desperate measures apply, however absurd that these measures are. Vedar short sales operations did not improve the difficulties of Spain (or Italy). Conversely, this may make things worse by trying to prevent the market do its job. It is a sign over the European crisis.

Mon, 07/23/2012 - 09:05 | 2642115 timbo_em
timbo_em's picture

When will France follow the short selling ban madness?

Mon, 07/23/2012 - 12:43 | 2643001 MillionDollarBoner_
MillionDollarBoner_'s picture

C'est n'pas "madness"

C'est "magnifique" !;o)

Mon, 07/23/2012 - 09:10 | 2642117 Mercury
Mercury's picture

Evidently long selling is still functioning properly...D'oh!

What the hell happens to open interest options in these situations?

Mon, 07/23/2012 - 09:48 | 2642269 eclectic syncretist
eclectic syncretist's picture

I may be incorrect on this, but I believe you can still buy puts, so the ban is really just the big boys getting the little guys out of the playground so they can have more of the pie all to themselves.

I'd wait until the inevitable short squeeze runs it's course and buy puts.

Mon, 07/23/2012 - 09:05 | 2642118 buzzsaw99
buzzsaw99's picture

MS is Banco Santander in draghi?

Mon, 07/23/2012 - 15:55 | 2642128 Duke of Con Dao
Duke of Con Dao's picture

here's something to watch while you ponder Spain's decision: 

YouTube - "Howard Roark, You Didn't Build That!" says President Obama

Obama v Roark    (70 secs) A Classic I'm Tellin' Ya!   (unless you like Obummer)

Mon, 07/23/2012 - 09:09 | 2642132 NERVEAGENTVX

Cue another EU summit, another three letter acronym, another tie wire and duct tape fix, another "all better" market rally, another four hour half life before markets realize said tie wire and duct tape fix won't work................................something tells me we've been here before...and before...and before...and before...and before.......

Mon, 07/23/2012 - 09:17 | 2642166 Vince Clortho
Vince Clortho's picture

There is a looming shortage of 3 letter acronyms.

Mon, 07/23/2012 - 09:26 | 2642211 GMadScientist
GMadScientist's picture

Fiscal Union 2: FU2

Mon, 07/23/2012 - 12:46 | 2643019 MillionDollarBoner_
MillionDollarBoner_'s picture

Did anyone try putting some Manuka honey on it?

P'raps that'll work?

Mon, 07/23/2012 - 09:09 | 2642134 Snakeeyes
Snakeeyes's picture

Spain is shooting itself in the foot and is in a full state of panic.


Mon, 07/23/2012 - 09:12 | 2642142 firstdivision
firstdivision's picture

Shorting Morgan Stanley feels like beating up a quadriplegic.

Mon, 07/23/2012 - 09:21 | 2642184 Jake88
Jake88's picture

No it's beating up the guy who beats up quadraplegics and takes their lunch money.

Mon, 07/23/2012 - 09:13 | 2642149 NERVEAGENTVX

That 00:30 rip is a given

Mon, 07/23/2012 - 09:16 | 2642160 XtraBullish
XtraBullish's picture

Fear not! The PPT is warming up the juice machine. Trap all the mutts short in the first 30 minutes then they engage the turbines. The U.S. Treasury can buy every stock in the board times ten and never get a margin call. BTFP...

Mon, 07/23/2012 - 09:16 | 2642162 Bubble
Bubble's picture

here we go boys, strap yourselves in. the ride to reality is finally kicking in

Mon, 07/23/2012 - 12:48 | 2643031 MillionDollarBoner_
MillionDollarBoner_'s picture

Its been a fucking long wait... where are we, Disneyland?

Mon, 07/23/2012 - 09:18 | 2642173 AgK9
AgK9's picture

Spain has also apparently banned having their futures market being listed anymore on forexpros.com/indices/indices-futures  Will Italy be next?


Mon, 07/23/2012 - 09:24 | 2642193 john_connor
john_connor's picture

Ok. So the way to hedge this is to short or buy puts on MS based on this correlation? The above could have been coincidental, no?

Mon, 07/23/2012 - 09:31 | 2642221 GMadScientist
GMadScientist's picture

Correlation, causation...whatever. Do you want the compression trade or not? ;)

Mon, 07/23/2012 - 09:24 | 2642196 orangedrinkandchips
orangedrinkandchips's picture

Short Selling is like a Wildfire.....publicly bad, bad, bad....do not allow to happen...


but both are crucial to a free market/free enviorment....





Mon, 07/23/2012 - 09:33 | 2642230 GMadScientist
GMadScientist's picture

We categorically deny the existence of anything called a "bottom".

Mon, 07/23/2012 - 09:25 | 2642205 Negro Primero
Negro Primero's picture

'...there's always someone else for you to blame'

European shares hit by Spain short-selling ban

Mon, 07/23/2012 - 09:37 | 2642239 falak pema
falak pema's picture

when the euro hits 1.10 the FED will tremble, as USD will become too strong to resist WS from plunging. Profit margins will disappear in corporates given low utilistaion rates and slo growth.

Mon, 07/23/2012 - 09:46 | 2642264 Hype Alert
Hype Alert's picture

Short selling ban is just more proof the market is not what it's advertised to be. 

Mon, 07/23/2012 - 10:07 | 2642329 asteroids
asteroids's picture

(1) The shorts make money. (2) Change the rules on them and rip their faces off. (3) Confidently spout victory. (4) Shorts come back for blood. (5) Panic. (6) Print. This is 2008 all over again. We are at step 2.

Mon, 07/23/2012 - 10:18 | 2642391 Remington IV
Remington IV's picture

see ya

Mon, 07/23/2012 - 10:55 | 2642554 hedgehog9999
hedgehog9999's picture

Once again, short selling bans did not prevent the SPX from going down 333 points from 1000 in 08/09......


Mon, 07/23/2012 - 11:57 | 2642831 noses
noses's picture

Keep in mind that the short selling ban has been heavily supported by the betting industry lobbyists (also called the Mob) who obviously try stifling the competition in a legal way. Why bet on immaterial nonsense if you can waste your money on doped horses and crooked football games?

Mon, 07/23/2012 - 12:41 | 2642994 Grand Supercycle
Grand Supercycle's picture

SPX bearish weekly chart strengthens: an important development.

As mentioned on Friday, SPX downleg continues.

Useful SPX weekly chart at my blog.


Mon, 07/23/2012 - 12:50 | 2643040 MillionDollarBoner_
MillionDollarBoner_'s picture

I love it!!!

Someone still believes in voodoo !:O)

Do NOT follow this link or you will be banned from the site!