The ban on shorting financial companies and others who somehow qualified for the No Short list is scheduled to expire tomorrow. But don’t get excited about shorting the stocks on the list quite yet. It looks like the “emergency ban” will be extended for a couple of more weeks.
U.S. regulators are likely to extend a ban on short-sales of financial stocks and is considering new protections for all publicly traded companies, NYSE Euronext Chief Executive Officer Duncan Niederauer said.
Under U.S. Securities and Exchange Commission rules, the ban can be extended through Oct. 19. Investors are barred from betting on price declines for almost 980 stocks ranging from Citigroup Inc. to companies that generate only fraction of their revenue from financial activities such as AutoNation Inc.
“We are fairly confident that it will be extended for a short period of time,” Niederauer said in a conference call with companies that was broadcast on the NYSE Web site. “I think the SEC is fully aware that the ban we have for a select number of stocks is not a long-term solution.”
Is the ban working? Well, that depends on what you mean. Wachovia and Washington Mutual saw their shares get killed even under the protected umbrella. But overall, the protected stocks have faired well compared to market indexes. The Great Unshortables have gained 2.5 per cent during the ban, while the S&P has declined 3.8 per cent, according to Bloomberg’s index.
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