Today marks a historical day for the SEC. As you obviously are aware of if you have anything to do with stock trading, the market has taken a dive in the last 2 trading days. Most of this fueled by the Lehman bankruptcy, as well as the Federal reserve bank bailing out American Insurance Group with a $85,000,000,000.00 loan.
Many experts think that the cause of AIG’s collapse has something to do with the lack of regulation in short selling. The Regulation Sho List is which can be found at: Nasdaq Regulation Sho List is put in place to inform traders of current shorts. “Regulation SHO” was enacted to curb the practice. It requiring that broker-dealers have grounds to believe that shares will be available for a given stock transaction, and requiring that delivery take place within a limited time period
Today the SEC enacted new regulations.
The first eliminates an exemption for options market makers to deliver shares of companies placed on so-called threshold lists (reg sho list) Companies are listed when they have a high number of borrowed shares that haven’t been delivered.
The second SEC rule imposes harsh penalties on brokers if their clients haven’t delivered shares to buyers three days after a short sale. For the security that hasn’t been delivered, the regulation restricts brokers from conducting any additional short sales on behalf of all their customers.
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