The ban on short selling which was supposed to expire on Thursday has been extended by the regulators This will facilitate time for the Congress to work on a financial rescue package. However, the extension is limited till 11.59 p.m, Eastern Time on Friday October 17.
The efficient and effective work of lawmakers would definitely help to end the ban sooner. As per the orders of S.E.C, it was supposed to end 3 days after (on third day) the congress enacts the Legislation. The measure passed by the senate on Wednesday is expected to go to the House of Representatives on Friday to put to a vote.
There has been the same extension i.e. October 17, in many other temporary measures which were taken by SEC last month. One of them is leniency in buy back of own shares by companies. Other is the necessity of weekly reports to be submitted by large money managers even on short positions.
The SEC said that there would be a modification in the short-position reporting requirement so that they are not released publicly and kept confidential. The regulators plan interim final rules for money managers to file the reports “without interruption” after the extended date.
Earlier the SEC said that it would release reports immediately but due to disagreement from money managers and hedge funds it agreed to delay the public release. However now the revised order says that disclosure under emergency “will be made only to SEC”. Thus, there have been constant changes in this rule.
Stricter rules for delivery of stocks, which were, borrowed for use in short sales will also
be extended.
The main motive of issuing SEC emergency rules was to avoid aggressive short selling of financial stocks after the crisis in the stock market.
