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@vmpWould you like to know who is in control of Interactive...

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anatol

5,962 Posts.

20803

23/12/22

11:47

Post #: 65429183
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Originally posted by dynofish: ↑

Ok...this subject of shorting shares etc has been a hobby horse of mine for over 20 years. I have been investing for over 40 years. In around 2008 or 2009 I wrote to the Finance Minister who was a Labor person...from memory Nick Sherry.Unfortunately I do not still have a copy of what I wrote, but I wasn't very impressed with the response.

For the benefit of some on here who are relatively new to investing, here are a few points:

The ASX makes many/most of the rules for trading, regulating and informing markets. Although it wasn't always the case, ASX is a publicly listed, for profit, organisation. It benefits from volume of trades due to charges for use of its platform. Therefore, in many respects ASX has a conflict of interest in relation to the various investor types. They WANT to see trading. They make little or no money from people who buy and then keep shares in the drawer figuratively speaking. The way brokers are permitted to lodge buy and sell orders for 1 share and use algorithmic based computer trading which can place orders to both sides of the boards with split second timing gives them enormous advantage. The rules such as what buy/sell depth is disclosed is an area of contention to me too. It is notionally designed to "help us" to see what's happening, but of course it is a two edged sword. Why not simply show the immediately available buys and sells at the money price rather than a stack which can then be used to put up a false wall of sells or buys that can be withdrawn if/when traders wish. This creates a major advantage to brokers/traders. Basically I'm saying because of the ASX's commercial interests, it's not a level playing field.

I am aware that superannuation funds are very active in the "lending" of shares in their portfolios. This to me seems to run counter to the underlying interests of the superannuants. In a past life I questioned a superannuation manager about the practice and was informed that it represents a valuable supplementary income stream for its clients through the receipt of a margin for the "loan" which can be around 1.5%. However, I feel there is an imbalance of available information that disadvantages us as smaller investors as these loan agreements do not have to be disclosed unless it changes their standing in respect of substantial shareholder positions etc. This, it seems to me, can and is used again to send signals to markets in some situations. So we are informed in some cases through ASX disclosures but not in others.

During various government (or ministerial) enquiries into short selling those whose business it is to profit from the practice have lobbied and presented arguments that state that through the active use of these lending processes, there is greater liquidity in markets that leads to a "correct" (my word) balance of price discovery and therefore the right valuation of a company's real worth is revealed. This argument that forms the basis of convincing regulators that it is the right approach is so transparently flawed, I get annoyed even thinking about it. In other words it's in all our interests to see shares "correctly" valued, but there is no mention about how large players with access to loan shares are not interested in the altruism of having a well valued stock market. Rather, those players are only interested in using the available imbalance of opportunity to make profits. So what happens is that the loan shares are used to manipulate trading in the direction they wish. Then they of course exit when their interests have been satisfied while any investor who is compelled to sell for personal reasons has to suck up the price they are shown in the meantime. Total imbalance of opportunity!

I recall arguing in my correspondence to the minister, that shorting is effectively "negative equity" insofar as shorters are reducing the capital potentially available to companies. This to me is completely counter to what a government should be supporting. Free flows of capital are fine. Allow people and institutions to buy and sell the shares they own freely. But do not allow this kind of derivative lending where multiples of the real number of shares are effectively available in the market. That is how the world of finance became a disaster area in the GFC. Mortgage lending became a commodity to be packaged up and resold in multiple forms using bits of paper that say you have the right to sell/buy the risk etc. Quite frankly, as anatol has said, we should be able to prevent our shares (or an interest in them) from being loaned or traded without our knowledge. I will go further and state that it should be outlawed as it only benefits those insiders and not all investors. Let's have a level playing field.

Rant over for now!

Regards
DF

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@dynofish
Great information mate. Thank you.

Originally posted by vmp: ↑

Try the steps to open an account with interactive brokers (without completing it)

this is not advice for you or anyone to open an account with them, but jus to demonstrate what I’ve stated above

You may make money lending your shares too instead of being used for free.

Consider also how safe the broker is. This is probably more important than anything else

all imo

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@vmp

Would you like to know who is in control of Interactive Brokers?

(BVS: Blackrock-Vangurd-State Street)

(As I said before I get all these tables from Financial Times web site. You can do the same and get the profile of any company to see its insto holders. These are facts but no conspiracy theories)

Goldman Sachs !!!
When its downramping lithium market who is buying you know that. BVS are buyin in all lithium stocks and giving substantial holder notices.

Soo I am tightly holding my shares.

PS: Merrill Lynch is owned by Bank of America which is also in control of BVS group.

I recommend you to have a look at our national banks through the FT web site. Especially to NAB and ANZ, to see who are the largest shareholders there.
LTR Price at posting: $1.27 Sentiment: Hold Disclosure: Held
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