A number of studies have suggested that the source of most delivery failures are due to
naked shorting (Fotak, Raman, & Yadav, 2009; Boulton & Braga-Alves, 2010; Stone, 2010).
Naked shorting is even more controversial than regular shorting because it seems so improper to sell something that the seller doesn't possess, but again, many academics argue that
naked shorting helps to reduce irrational exuberance.
A total of 17 EU countries have suspended
naked shorting in general since the start of the crisis, with Greece, Belgium, Spain, France and Italy this summer enacting extra restrictions on bank shares.
The two will go head to head to discuss
naked shorting.
The vast majority of the responses to the EC consultation defended short selling as a source of liquidity although
naked shorting, the practice of short selling without first securing a source for borrowing stock, was decried by a number of firms such as broker CA Cheuvreux.
The SEC has never condoned the practice, and since 2005 it has clamped down on short selling in any stock that shows evidence of
naked shorting. The SEC further tightened its rules against
naked shorting just hours before Mr.
More than 100 small- and micro-cap firms have filed complaints, alleging market maker manipulation and "
naked shorting" of their firm's securities.
A total of 17 EU countries have suspended
naked shorting since the start of the crisis, with Greece, Belgium, Spain, France and Italy this summer becoming the latest to enact restrictions on bank shares.
The consultation covered the types of security that can be short sold, transparency,
naked shorting, exemptions and the powers of authorities appropriate in normal and exceptional circumstances.
These requirements were however shown insufficient to eliminate
naked shorting (Evans, Geczy, Musto, & Reed, 2009).
It's hard to defend
naked shorting, which enables speculators to drive down a company's stock by offering an overwhelming number of shares for sale.
Naked shorting shifts out the supply curve, dropping the price.
