Regulations Outside of The United States
Several international exchanges have either partially or fully restricted the practice of naked short selling of shares. They include Australia's Australian Securities Exchange, India's Securities and Exchange Board, the Netherlands's Euronext Amsterdam, Japan's Tokyo Stock Exchange, and Switzerland's SWX Swiss Exchange. Also Spain's securities regulator CNMV.
In March 2007, the Securities and Exchange Board of India (SEBI), which disallowed short sales altogether in 2001 as a result of the Ketan Parekh affair, reintroduced short selling under regulations similar to those developed in the United States. In conjunction with this rule change, SEBI outlawed all naked short selling.
Japan's naked shorting ban started on November 4, 2008, and was originally scheduled to run until July 2009, but was extended through October of that year. Japan's Finance Minister, Shōichi Nakagawa stated, "We decided (to move up the short-selling ban) as we thought it could be dangerous for the Tokyo stock market if we do not take action immediately." Nakagawa added that Japan's Financial Services Agency would be teaming with the Securities and Exchange Surveillance Commission and Tokyo Stock Exchange to investigate past violations of Japanese regulations on stock short-selling. The ban was subsequently extended through October 2010.
The Singapore Exchange started to penalize naked short sales with an interim measure in September, 2008. These initial penalties started at $100 per day. In November, they announced plans to increase the fines for failing to complete trades. The new penalties would penalize traders who fail to cover their positions, starting at $1,000 per day. There would also be fines for brokerages who fail to use the exchange's buying-in market to cover their positions, starting at $5,000 per day. The Singapore exchange had stated that the failure to deliver shares inherent in naked short sales threatened market orderliness.
On May 18, 2010, the German Minister of Finance announced that naked short sales of euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany's ten leading financial institutions will be prohibited. This ban went into effect that night and was set to expire on March 31, 2011. On May 28, German financial market regulator BaFin announced that this ban would be permanent. The ban is effective July 27, 2010. The International Monetary Fund issued a report in August 2010 saying that the measure succeeded only in impeding the markets. It said the ban "did relatively little to support the targeted institutions’ underlying stock prices, while liquidity dropped and volatility rose substantially." The IMF said there was no strong evidence that stock prices fell because of shorting.
In August 2011, France, Italy, Spain, Belgium and South Korea temporally banned all short selling in their financial stocks, while Germany pushed for an eurozone-wide ban on naked short selling.
Read more about this topic: Naked Short Selling
Famous quotes containing the words united states, regulations, united and/or states:
“... when we shall have our amendment to the Constitution of the United States, everyone will think it was always so, just exactly as many young people believe that all the privileges, all the freedom, all the enjoyments which woman now possesses were always hers. They have no idea of how every single inch of ground that she stands upon to-day has been gained by the hard work of some little handful of women of the past.”
—Susan B. Anthony (1820–1906)
“The admission of Oriental immigrants who cannot be amalgamated with our people has been made the subject either of prohibitory clauses in our treaties and statutes or of strict administrative regulations secured by diplomatic negotiations. I sincerely hope that we may continue to minimize the evils likely to arise from such immigration without unnecessary friction and by mutual concessions between self-respecting governments.”
—William Howard Taft (1857–1930)
“You may consider me presumptuous, gentlemen, but I claim to be a citizen of the United States, with all the qualifications of a voter. I can read the Constitution, I am possessed of two hundred and fifty dollars, and the last time I looked in the old family Bible I found I was over twenty-one years of age.”
—Elizabeth Cady Stanton (1816–1902)
“The traveler to the United States will do well ... to prepare himself for the class-consciousness of the natives. This differs from the already familiar English version in being more extreme and based more firmly on the conviction that the class to which the speaker belongs is inherently superior to all others.”
—John Kenneth Galbraith (b. 1908)