Ann: Becoming a substantial holder from MQG , page-12

'I hate shorters!'

I hate them too, with a passion. More specifically I hate naked shorters.

OK, so do you think there's a chance we could round up enough HC members who hate shorters to write to ASIC or the minister of finance or someone who can make a change?

If the regulators can put together the following I'll be more than satisfied:

1. Mechanism to ensure that everyone who submit a sell order must have the stock (either having bought or borrowed).

2. Every share lending/borrowing 'transaction' must be completed on an exchange (maybe ASX will love this) so companies have some knowledge who lent and who borrowed how many shares.

3. Every sell order where the seller is not the owner but is the borrower, such order must be indicated. So the rest of the market know which sell is a short sell. And at the end of the day we all know what % of the day's trade was short.

4. Every buy or sell order must be accompanied by the broker's ID that identifies who they are. So at least it become possible to catch those who naked short.

5. Any broker found to engaged in naked short should have their broker license revoked.

The first thing I hate is if some brokers 'lend' shares that belong to their clients who have no idea their shares have been 'lent'. So having an exchange to clear the lending and borrowing will hopefully safeguard against this.

The second thing I really hate is if some brokers allowed (or collaborate with) some hedge funds to naked short, not having borrowed from anyone at all. If they properly borrowed the shares and only do properly covered short there is a limited supply because at least the lenders should care
about the value of their shares. But if a large participant is able to naked short then the supply become limitless. They just keeping piling on sell orders and you and I wonder where the supply is from, and who is selling?

Now, I am sure all those who love to profit from short selling will absolutely hate what I proposed above and they'll come up with all sorts of crap about how short selling improve liquidity and how it's a 'price discovery' mechanism and how it 'keeps companies honest' blah blah.

We really should make get our message to the regulators and bring about some change. What is currently in place favours the crook.