Hi kmuirhead,
"Why on earth would an index fund commission a third party to do the short selling so the third party could borrow shares and sell these shares to the index fund?"I think the following logic underlies this:
- An index fund must reflect the inclusion of STX in an index (e.g. ASX 200) in proportionately in a certain time.
- Therefore, the fundmust acquire a correspondingly large quantity of STX shares. The index fundtherefore creates - from its point of view - an “artificial” and large demand.
- If the index fund were to buy the required Strike shares on the market, this would lead to a significant increase in the share price.
- However,an index fund wants to avoid this, as a fall in the share price after coveringits own requirements would have a direct negative impact on the fund value.
- Shortselling therefore provides the necessary liquidity: the index fund can coverthe necessary demand immediately - without moving the share price.
That is theanswer to your question...
I expect that we will see an enormously high volume tomorrow in the closing auction andon Friday an ASIC report on an equally high short selling volume.
Let's see...
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20.0¢ |
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Mkt cap ! $572.1M |
Open | High | Low | Value | Volume |
20.5¢ | 21.0¢ | 20.0¢ | $1.785M | 8.776M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
76 | 3486632 | 20.0¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
20.5¢ | 1783463 | 9 |
View Market Depth
No. | Vol. | Price($) |
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69 | 3217422 | 0.200 |
30 | 2429917 | 0.195 |
40 | 1749416 | 0.190 |
10 | 380825 | 0.185 |
15 | 486445 | 0.180 |
Price($) | Vol. | No. |
---|---|---|
0.205 | 564004 | 3 |
0.210 | 479558 | 6 |
0.215 | 818358 | 8 |
0.220 | 3136893 | 14 |
0.225 | 641223 | 9 |
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