Monday, September 29, 2008

Arturo Bris makes sense on short selling

Don't ban it:
For every short sale, there is a commitment to buy. That generates liquidity. Giving pessimists and optimists equal opportunities to commit their capital engenders competition that enhances price discovery. Since much short selling in equity markets is done to hedge risks, market volatility suffers in its absence.

Liquidity, price discovery and, above all, allowing both optimism and pessimism to act, unfettered, will bring back investors' confidence. America's market is one of the world's most resilient; its leaders can guide the way out of this difficult time if they learn from the mistakes and work together.

Chairman Cox, the decision that you and your commissioners must make this week, then, is an easy one. Stop the folly. End the ban.

Soteria Trader and I agree.

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