Thursday, May 14, 2009

Shorting These Stocks Is Now Verboten

For all who wonder which shares are poised for the next invisible hand lift off, I present an email distributed earlier today by CMC, which is a major spread betting provider in the UK, to its clients. If certain individuals at Morgan Stanley's ETF and quant trading operations want to opine as to the inaneness of the current hard to borrow nature of these stocks, now is the time to speak up (oh wait, curiously Morgan Stanley itself is in the Do Not Short list... hmmm... kinda odd that, is it not?).

Which brings up the question: who exactly is it that sets the availability of borrowable shares or the cost of borrow? Is it the custodians, the State Streets and The BONYs, who as we know are highly conflicted and have every interest in pushing stock prices higher, or is the prime broker repo desks: the Goldmans and the Morgans (both JP and Stanley) of the world? Inquiring minds want to know just who is making shorting impossible these days.
Short selling update

Due to significant increases in the cost of borrowing stock in the underlying market, along with a lack of available shares to borrow, we have been forced to restrict short selling on the following US Shares:

Clients are not allowed to open any new short positions or increase any short positions in these instruments. If you currently hold an open short position, you are not forced to close this and if you need to sell in order to close a long position your order will be accepted.
hat tip David Sphere: Related Content
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