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JP Morgan believes US will ban short selling banks like in 2008
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05-07-2023, 08:53 AM
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#1
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JP Morgan believes US will ban short selling banks like in 2008
US to Ban Short-Selling, JP Morgan Says
7 May 2023, 09:36 GMT
Analysts at JP Morgan believe U.S. regulators might target short selling to prevent a contagion amid the rising banking crisis.
With several U.S. banks collapsing recently, industry players have argued that short sellers are scaring people to think the crisis would ensnare more banks. JP Morgan analysts noted that this argument might temporarily force regulators to halt short-selling activities.
Short selling is a form of investment that looks to profit from a decline in the price of a security.
Why Short Selling Might be Banned
On May 4, the American Banker Association (ABA) wrote the U.S. Securities and Exchange Commission (SEC), expressing worry that short sellers might be manipulating the market. ABA’s Chief Policy Officer Naomi Camper noted that some shares trading defy the underlying fundamentals.
Meanwhile, JP Morgan highlighted this concern in its note. According to the banking giant, it has never seen a situation where a “perfectly healthy bank” ends up in the hands of the FDIC [Federal Deposit Insurance Corporation] within a very short period.
The bankers further noted that the pressure affected even banks in good financial positions as more Americans now worry about their money in these banks. Short Sellers have been blamed for stoking fears leading to the significant price swings in shares of several regional banks. Pacific Western in Los Angeles and First Horizon in Tennessee have significantly declined in share value over the two months.
Shorters Swim in Profit From Banking Crisis
While three major regional banks holding $532 billion in deposits have already failed, short sellers appear to be swimming in profits. Data firm Ortex reported that sellers had made $1.2 billion betting against these struggling stocks.
For context, shorters reportedly made $379 million by shorting First Horizon, PacWest, and Western Alliance shares on May 4.
7 May 2023, 09:36 GMT
Analysts at JP Morgan believe U.S. regulators might target short selling to prevent a contagion amid the rising banking crisis.
With several U.S. banks collapsing recently, industry players have argued that short sellers are scaring people to think the crisis would ensnare more banks. JP Morgan analysts noted that this argument might temporarily force regulators to halt short-selling activities.
Short selling is a form of investment that looks to profit from a decline in the price of a security.
Why Short Selling Might be Banned
On May 4, the American Banker Association (ABA) wrote the U.S. Securities and Exchange Commission (SEC), expressing worry that short sellers might be manipulating the market. ABA’s Chief Policy Officer Naomi Camper noted that some shares trading defy the underlying fundamentals.
Meanwhile, JP Morgan highlighted this concern in its note. According to the banking giant, it has never seen a situation where a “perfectly healthy bank” ends up in the hands of the FDIC [Federal Deposit Insurance Corporation] within a very short period.
The bankers further noted that the pressure affected even banks in good financial positions as more Americans now worry about their money in these banks. Short Sellers have been blamed for stoking fears leading to the significant price swings in shares of several regional banks. Pacific Western in Los Angeles and First Horizon in Tennessee have significantly declined in share value over the two months.
Shorters Swim in Profit From Banking Crisis
While three major regional banks holding $532 billion in deposits have already failed, short sellers appear to be swimming in profits. Data firm Ortex reported that sellers had made $1.2 billion betting against these struggling stocks.
For context, shorters reportedly made $379 million by shorting First Horizon, PacWest, and Western Alliance shares on May 4.
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05-07-2023, 09:01 AM
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#2
- ProudKraut
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- ProudKraut
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Doesn't sound like market manipulation at all. Brb you can't short my shady tax payer funded gambling business bc reasons.
lol@ no coin cels
lol@ no coin cels
05-07-2023, 09:02 AM
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#3
05-07-2023, 09:04 AM
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#4
05-07-2023, 09:07 AM
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#5
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Originally Posted By LtGoose⏩
Physical, not paper. If you go that route.I'll just invest in Gold and be alright OP
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05-07-2023, 09:43 AM
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#6
- Duckliver
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- Duckliver
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They Ignore the naked shorting and phantom shares with retail chit stocks and startups but obv regulators decide to do their jobs now. How about instead of pretending like they are concerned over regular short positions, they are concerned about fake prices and price suppression using naked shorts and what happens if they actually blow up the shorts positions because the margin call is so massive the entire derivative bubble will burst.
Right now it’s head to head with two industries that drag the entire economy down with them. But shorts are trying to pressure fed into lowering rates and fukking us all with inflation or they are basically threatening to blow up our banking system.
Just like the Israeli hedgefund started the run on SVB, but a little better pr than an actual bank run I guess.
Right now it’s head to head with two industries that drag the entire economy down with them. But shorts are trying to pressure fed into lowering rates and fukking us all with inflation or they are basically threatening to blow up our banking system.
Just like the Israeli hedgefund started the run on SVB, but a little better pr than an actual bank run I guess.
05-07-2023, 10:52 AM
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#7
05-07-2023, 10:53 AM
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#8
05-07-2023, 10:54 AM
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#9
- BigDaddyBiceps
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- BigDaddyBiceps
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Terrible idea. Shorts are part of the market and hold risky over leveraged companies accountable and reasonably valued. Remove that and these companies don't have to worry and will take on extra risk and ultimately lead to more bubbling/retail mom and pops getting rekt.
All in the favor of banks.
All in the favor of banks.
05-07-2023, 11:10 AM
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#10
- OliverHeldens
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Originally Posted By Duckliver⏩
Yeah, it's absurd how much pressure is on the Fed right now when they clearly aren't even close to the end of the current tightening cycle. During the Press Conference last week you could tell the Powell was nervous as fuk and trying to be super vague about his intentions going forward. When in reality, he knows they aren't lowering interest rates anytime this year.They Ignore the naked shorting and phantom shares with retail chit stocks and startups but obv regulators decide to do their jobs now. How about instead of pretending like they are concerned over regular short positions, they are concerned about fake prices and price suppression using naked shorts and what happens if they actually blow up the shorts positions because the margin call is so massive the entire derivative bubble will burst.
Right now it’s head to head with two industries that drag the entire economy down with them. But shorts are trying to pressure fed into lowering rates and fukking us all with inflation or they are basically threatening to blow up our banking system.
Just like the Israeli hedgefund started the run on SVB, but a little better pr than an actual bank run I guess.
Right now it’s head to head with two industries that drag the entire economy down with them. But shorts are trying to pressure fed into lowering rates and fukking us all with inflation or they are basically threatening to blow up our banking system.
Just like the Israeli hedgefund started the run on SVB, but a little better pr than an actual bank run I guess.
As someone whose income is directly related to low interest rates, this chit sucks. But it needs to happen. Markets need to normalize so people can have ownership. The US doesn't work unless people have ownership stake in the outcome of their decisions.
05-07-2023, 11:48 AM
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#11
05-07-2023, 05:04 PM
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#12
- Duckliver
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- Duckliver
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Originally Posted By Austanian⏩
So the thing about that is they actually don’t always do that and market makers are complicitDumbest thing.
In order to buy a short someone has to be selling a short.
AKA for every buyer thinking it will go down someone is thinking it wont.
In order to buy a short someone has to be selling a short.
AKA for every buyer thinking it will go down someone is thinking it wont.
How was game stop shorted over 120% acknowledged in court even if % was most likely higher, that % is only possible with naked shorting.
Naked shorting happens in US market all the time and is becoming a design feature. Plenty of small cap tech guys have bought their entire float and still seen shorts come flying in sent by algos and systematically every day. That should not be possible, yet it’s regularly occurring for years now.
05-07-2023, 05:09 PM
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#13
- ErnieMccracken
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Well think of it this way - It's your money at stake.
Even if they're shorted all the way down into bankruptcy, they definitely aren't just going to close up shop and go away. Guess who will be eating their losses?
Even if they're shorted all the way down into bankruptcy, they definitely aren't just going to close up shop and go away. Guess who will be eating their losses?
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