John Creighton says 16 years ago

With regards for the renewal of the short selling ban. Every shot sell is accompanied by a long position. If that long position is cash then short selling strengthens the dollar. If the long position is another stock then that strengths the value of the stock you go long on to balance the short. Allowing short selling makes stocks more easier to buy (more liquid) because the number of buyers goes up.

Short selling serves a useful arbitrage function method and generally should make the markets more efficient in determining the correct value of stocks. It also serves as an additional source of revenue for the person lending the stock.

Rather then trying to ban shot selling regulates should make it easier for people to earn interest on their stocks. That is I should be able to give my broker permission to lend my stock and earn additional money above and beyond any, interest and capital gains on the stock.
1. Edward Harrison says 16 years ago
  
  The FSA is crazy. I f anything the lack of shorts hurt the market these past few months. There is zero evidence shorts are bad for the market. Even the article says so:
  
  Despite the ban on short selling, the share prices of banks and other financial institutions continued to fall last year and academic research published at the end of December insisted there was no strong evidence that the emergency restrictions had changed the way share prices moved.
  
  The research, by Professor Ian Marsh and Norman Niemer of Cass Business School in London, was commissioned by the International Securities Lending Association, the Alternative Investment Management Association and the London Investment Banking Association and was used as the basis for their argument that there is no case for continuing a ban on short selling. The organisations, which represent stock lenders, hedge funds and investment banks respectively, insist there is no evidence that preventing short selling has reduced share price volatility or limited share price falls.

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