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RELLIM
Yes I see it's over the 550 support and gaining a wider audience all the time. Some other folk have been adding the link on their respective boards too so "well done" to us all. :0)
https://www.change.org/p/department-for-business-energy-industrial-strategy-make-short-selling-of-shares-illegal
Hi AB2332, It looks now as though it is beginning to hit a few more BBs, you putting on LGEN will have added quite a few and the total is now over five hundred and rising. Feel like saying well done, but that sounds patronising and I don't mean it that way.
RELLIM
I left the link at Legal & General (LGEN) chat board where I am also invested but understand, I am a nobody, just a punter.
You say "... maybe it will attract the attention of the FCA .." If it is not talked about or attention is not drawn to it Shorting will certainly never change but these days you have a decent enough chance. Communication revolution. Online blogs, alternative television channels and the like reporting the hitherto unreported.
https://www.change.org/p/department-for-business-energy-industrial-strategy-make-short-selling-of-shares-illegal
They're all at it, LuckyL. Pension providers, investment banks, market makers (which are almost all owned by investment banks) and hedge funds. Just remember that the UK Treasury can't tax people's savings if they're in a tax wrapper of some kind (within approved pension funds typically) and CGT raises very little. If the Govt allows people's savings (either in the form of pension fund investments or personal share portfolios, which lose, or fail to gain, value as a result of the unprincipled, immoral or plain dishonest activities of the types we've identified) to be plundered by these hyenas, it gets to tax the UK based operations of the organisations behind the gigantic scam and also the ludicrous packages paid to people who gamble with generally decent people's money at no risk to themselves or the organisations they work for (hedge funds excepted).
I'm done on the subject. It is repulsive and it sickens me, as it should our Government but doesn't.
jmofwiw
dyor
...indeed US companies are valued a much higher PE than over here.
Are we sure we are barking at the right tree with this campaign against shorting?
Maybe the Gov should set a %spread limit/cap for MM, something will never happen.
Thank you for the reply dickupham.
Maybe you explained it all regarding MM activities in destruction of share value....
In US market buying and selling shares or the spread is very often in the range of 1 unit, or 1 Cent, over here as you know it is a complete different story. At the rate of 2/3% spread in long terms guess who is disrupting share value?
LuckyL - naked shorting is illegal in the UK (and most other places). The only people who can go short naked are market makers...........but only if it is as part of its normal market making activities.
No comment.
Looking at the role pension fund providers play in the long term destruction of shareholders value via the shorting activities of the tens of thousands of hedge funds looking for exceptional gains for their already rich investors, I don't believe it's legitimate to say that shorting (by pension fund managers) is done mostly for hedging purposes. If a fund manager is holding a particular stock in whichever fund he's managing and he decides to sell part of it with the intention of buying it back later for less, perhaps because he feels exposed at a point in time or maybe because he thinks the price is 'toppy', why should that be called "shorting"? He's simply selling down a stock that's in his portfolio. Whether or not he buys it back later and at what price is academic.
So that narrows things down to the loan of assets (stocks) belonging to others by the custodian of those assets (whose conduct is supposedly monitored by independent trustees - laugh now) in return for fees that are either banked by the lender or, at best, shared with the beneficial owners.
As for those who say stock lending and shorting doesn't cause anyone longer term loss, that's a fallacy. Everyone knows that stock prices are determined by supply and demand. The stock market might be likened to a giant, water-filled fish tank, with the companies forming part of that market being the fish. Hedge funds whose interests focus on shorting tend not to be long term investors in companies forming part of the markets they trade in. Rather, they like calling in occasionally, taking out of the tank the equivalent of a pint of water each time they call. When they've gone, each fish has a bit less water (containing the oxygen they need to remain healthy) to swim in. Eventually, with no fresh water added, the fish would begin to die. In actual parlance, there's less money in the markets chasing the same number of companies, so prices fall (or fail to gain).
This is the clever bit. By legislating that people saving for retirement can only get tax relief by investing those funds in the stock market (almost invariably in the form of contributions to approved pension providers to supposedly invest their hard earned for maximum growth - laugh here too) the Government perpetuates the scam . A fresh supply of water is injected each year. Why does anyone think the performance of so many funds is so abject? FTSE 100 index today the same as it was 20 years ago??
Thousands of people in the City are playing the same game - how to get their hands on a share of the trillions of pounds of the savings of people like you and me. The City pays a giant chunk of all UK taxes. Message to incoming chancellor each time: "don't go there" - and FFS tell the FCA to lay off.
dyor
Hi sasa
My stint was off old broad street. Sounds like you worked for a few more than i did
Atb upomega
Hi AB2332, my apologies for not getting back to you earlier but have been away for the weekend. It has now topped the 300 mark, so steady but sure. I was the 32nd to sign and put it on here and another board that I am invested in as I do strongly believe that along with the activities that it tends to attract, it is highly immoral. I think the post from dickupham is the perfect description of this activity.
Maybe the petitition will never reach the total required for it to go before Parliament (100,000 I believe) but maybe it will attract the attention of the FCA, although I don't have much faith in them either.
Hi upomega - well, it's possible, I guess.
From the early 60's onwards, was in London Wall, then Cornhill, then Throgmorton Street and afterwards Chancery Lane / High Holborn area (been around quite a bit) - thereafter was operating 'offshore' in the Channel Islands for a decade or so - sasa.
...I am not 100% sure but my understanding is that "naked shorting is allowed and used" whereas I don't thinks exists the equivalent in "naked long".
Moreover shorting or for that matter going long with shares not owned, doesn't benefit the company one is investing on, but only few people in the know.
RELLIM
Signed.
240 signatories at noon today. Wee bit of work to be done to get the thing aff an' running. Pity lse Home page didn't report on the link. They don't have to actually say they agree with the objective merely alert savers/investors that a petition exists.
https://www.change.org/p/department-for-business-energy-industrial-strategy-make-short-selling-of-shares-illegal
God Shaw the Richt.
Sasa
As a matter of interest did you work near New Broad Street. I was there around that time. You never know we may have worked for the same company
QC - I don't disagree with some of the counter arguments you put together. A common reason put forward by fund managers going short is to hedge long positions, particularly at strategic times (like cut-off dates for the working out annual bonuses?). I'm not aware there's a particular formula for sharing lending fees but you might be right. I've long since given up trying to get people (who are paid to investigate and stop abuse of investors by City outfits) to do their jobs competently and honestly, so I might not be right up there on the extent to which the unwary get skinned these days.
The moral justification you cite is in my view pretty thin. I know what's buried in the small print but the average punter won't. What's in the small print (why isn't it in bold?) hardly justifies what a lot of the guilty parties get up to. The pension fund providers justify their shorting activities not only with the hedging argument, but with " it doesn't matter much if an individual share price suffers a short term drop, because we invest for the long term and prices always recover". Poppy**** - what about investors converting to annuity at the time shares in their fund are returned damaged? And as for their argument that the lending fees help them keep fund management charges low? Ditto. I talked to enough pensions providers (in the days when I had the enthusiasm to do so) to know that what I'm suggesting does go on; I'm not a conspiracy theorist (I was a partner in one of the so-called 'Big 4', where my interests lay outside audit - I packed in early 21 years ago after losing my respect for the firm I'd been with throughout my career; I've never once regretted my decision).
I don't want to get into a long debate over the issue, QC. I've got mountains of info to back up my stance on the subject, accumulated over many years. You have your own views, which is fine by me. I always enjoy reading your thoughtful, well-structured and intelligent posts, so don't want to fall out over differences of opinion.
As a matter of interest, to what do you attribute practically zero growth in the investment value of Britain's 100 largest companies over the last 20 years (as reflected by the FTSE 100 index - the composition of the top 100 changes at regular intervals so that the list is always made up of the 100 biggest cos by market cap)?
Options (and spread bets) are derivatives, whereas shorting affects the price of the asset in question. To use an analogy some might find appropriate, those who buy put options on the Traded Options Market aren't seeking to dope the horse they're betting will lose. If I understand the situation correctly, put options are generally used for hedging purposes. Do you know if options are extensively used by (for instance) investment banks and pension fund managers, or is shorting a better way to protect investors' interests? Best not to talk about hedge funds and whose interests they're out to protect
:-)
all imo/dyor
I have to respectfully disagree, Dick. The only moral angle I see is if the custodian is not disclosing to the owners of the assets that the are undertaking securities lending. Often they do disclose it but its buried deep in the fine print of account opening docs.
Respectable banks and third party custodians have separate securities lending agreements that clients can opt into. The terms are clear and the bank/custodian splits the security lending revenues with the owner of the assets (the client). The pickup can be substantial - it can be 40-50%+ p.a. for unsecured securities lending for bonds/equities where there is a very large short interest and high realised volatility. Typical revenue sharing is 50/50 or 60/40 in favour of the bank so it's clear why institutional investors such as pension funds engage in securities lending as they are acting as fiduciaries and it can meaningfully add to their P&L with minimal risk.
There are plenty of legitimate reasons why institutions lend/borrow securities. Institutions of various types manage their balance sheets with an eye to capital requirements and repos are a key tool to do this.
Shorting can also be used to hedge long positions and given that there is no time decay as with options it can be a far better tool for doing so.
Just out of curiosity ... do you also believe that put options should be banned as well? What about the actions of the Reddit hoards who precipitated a short squeeze on Gamestop leading to huge losses for several hedge funds who were short GME - is that market manipulation or justice?
All in my opinion only and do your own research.
As an ex - City man myself, I never indulged in the practice - immoral it is, imv - you're quite right, dick.
If and it's a BIG If, there's the flimsiest case for it, then pass the borrowing fee on to the owner of the shs the shorter utilises, not the agent entrusted with managing the clients's assets on a 'best endeavours basis' - his firm gets paid handsomely for doing that already - sasa.
dickupham, You have expertly described the practice and it doesn't paint a pretty picture does it? It's immoral in most investor's view, yet has been allowed to happen and we are all aware of the practices used to further the shorter's aims to control the SP's.
More power to your elbow, but agree that we are fighting an uphill battle.
Shorters have to borrow the shares they intend to sell, before later buying them back for less and returning the shares (now worth less) to the lender. Who on earth would lend their shares to these hyenas you might ask. Sadly, the answer is YOU - not that you'd know it.
Pension funds are the biggest lenders of shares and they get paid for doing it. They don't pass on their fees to the victims, though. They trouser them and the fund managers get bigger bonuses as a result. Investment banks are also frequent lenders - it's a nice earner for its morally bankrupt employees who are involved in discretionary funds management - particularly when acting in tandem with their low-life colleagues working on the trading desks, "Chinese walls"? Wtf are they?
I'm pretty sure internet brokers have now joined in on the bonanza. All those shares sitting in nominee accounts earning nothing? C'mon. You can instruct your broker (and pension fund manager supposedly growing your funds under his management) not to lend any shares beneficially owned by you and he'll agree not to. When he does then lend shares you own, he'll say he didn't lend yours; he lent someone else's. Get it?
The Government loves shorting. It can't tax investment income when it's in a SIPP or an ISA (or some other form of tax wrapper). Amounts involved are peanuts in any event and CGT earns only tiny amounts for the Treasury. Tax the profits from shorting made by UK investment banks and London-based hedge funds - and the huge packages paid to their scumbag City-based staff (all at highest personal tax rates), however? Now you're talking.
I wrote to Gordon Brown back in the day, alerting him to these immoral (at minimum) practices adopted in the City. I had a reply from a senior bod in The Treasury who told me that shorting is very healthy because it promotes liquidity and reduces dealing costs for investors. I wrote back saying the low-lifes doing the shorting wouldn't have the guts to short illiquid companies, so his response didn't make sense. He didn't respond to that or a reminder letter.
What of the the trustees of the pension funds run by managers who lend shares they can reasonably expect to be returned worth less? They're all cronies. They need to get sued for flagging it all through, but it would be a mighty difficult case to pursue.
FTSE 100 shares are the ones most often shorted. Look what happened in Oct 2018 and see how investment banks and hedge funds all decided together to help themselves around 10%investors/pension savers of their wealth, when there was no economic reason this should happen. Look also at the movement in the FTSE 100 over the last 20 years. Nil growth vs 300%+ for the FTSE250 (I know it's not a direct comparison, but.......).
Don't hold your breath re the petition (which I have signed in hope, not anticipation).
How much cash is SQZ banking a day, anyone? And how much does it add to SQZ's market cap per month?
all imo/dyor
Good idea, just chipped in £6 , hope it helps.
There is a petition to attempt to stop shorting. If you agree please sign
https://www.change.org/p/department-for-business-energy-industrial-strategy-make-short-selling-of-shares-illegal