What Does a Short Sale Specialist Do?

Naked short selling usually refers to an investment method in which an investor does not borrow stocks and sells stocks that do not exist directly in the market, and then buys back stocks to gain profits when the stock price further declines. Traders who naked short as long as they buy stocks before the delivery date, the transaction is successful. Because "naked short selling" sells non-existent stocks, the volume may be very large, so it will have a sharp impact on the stock price. Short selling was once considered a necessary financial innovation. However, after the financial crisis in 2008, many countries around the world issued bans on short selling because of the higher financial risks.

Short sale

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Financial innovation tools such as "naked short selling" are popular because the United States has always encouraged free trading in the capital market. Although there was a time limit for riskier financial instruments such as "naked short selling", "naked short selling" was allowed. presence. However, due to the difficulty

After the crisis broke out, countries other than the United States have also introduced measures to combat "naked short selling": for example, the United Kingdom issued a four-month ban on shorting financial stocks on September 18, 2008; Germany subsequently announced a ban Short-selling 11 German financial real estate stocks; the Dutch Ministry of Finance announced that three months from September 22 banned financial institutions from doing "naked short selling" operations; the Australian Government also introduced legislation to Parliament on November 13 for a permanent ban Naked short. It can be seen that the regulatory bodies of various countries have fully realized the harm of "naked short selling" on financial markets.

The global financial crisis triggered by the US subprime mortgage crisis in 2008 caused global financial market shocks. European and American stock markets tumbled. Since September 2008, the United States and many European countries have successively issued trading bans that prohibit short selling.

Since August 1, 2009, Naked Short Selling, the craziest transaction in the US financial market, will go completely into history. On July 27th, Eastern Time, the United States Securities and Exchange Commission (SEC) announced that it will make permanent a ban on "naked short selling" since September 2008. ^[2]

On May 18, 2010, the German Financial Supervisory Authority announced that from May 19, 2010, naked short selling of 10 large German financial stocks and eurozone government bonds was prohibited. The ban is valid until March 31, 2011. ^{[3] The} German government plans to ban naked short selling in the country's 10 most important financial institutions starting at 00:00 local time on Wednesday. The naked short-selling ban will also apply to euro government bond-related credit default swaps (CDS) and euro government bonds. The German Finance Ministry also said that the government would draft a bill on the related ban.

On August 25, 2010, the Spanish and Italian governments stated that the air embargo will last until September 30, and France will continue to implement the air embargo until further notice. Belgian financial authority FSMA said there is no end date for the air embargo in Belgium, but as long as market conditions permit, the feasibility of opening a covered short-selling transaction will be assessed.

The European Securities and Markets Authority (ESMA) said in a statement that it will review the extension of the air embargo before the end of September. Greece, the country that first introduced the air embargo, said that the air embargo expired on October 7 and will be reviewed at the end of September. Four countries including Italy, France, Spain and Belgium announced a ban on short selling on August 12, especially for unusually volatile financial stocks. At the same time, Britain, the EU's largest stock market, and the Netherlands had refused to follow up on the implementation of the air embargo when the stock market disaster broke out in August.