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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22.5¢ |
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Mkt cap ! $643.6M |
Open | High | Low | Value | Volume |
22.5¢ | 23.0¢ | 21.5¢ | $3.339M | 14.95M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
7 | 337869 | 22.5¢ |
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Price($) | Vol. | No. |
---|---|---|
23.0¢ | 1651352 | 24 |
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No. | Vol. | Price($) |
---|---|---|
4 | 130888 | 0.225 |
8 | 197936 | 0.220 |
10 | 795522 | 0.215 |
9 | 638320 | 0.210 |
8 | 417841 | 0.205 |
Price($) | Vol. | No. |
---|---|---|
0.230 | 1651352 | 24 |
0.235 | 945860 | 15 |
0.240 | 857582 | 16 |
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0.250 | 3178415 | 17 |
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