Rembrandt"Secondly, the ASX limits stocks that can be shorted...

Rembrandt
"Secondly, the ASX limits stocks that can be shorted and limits to 10% ..."

10pc of what? 10% of capitalisation is total rubbish - if that were shorted on any one day for any stock the SP would be trashed. The resulting volatility causes all sorts of collateral damage - there are too many impedances in financial systems for most players to react quickly enough to escape harm depending on their position on that day - a lottery. The indices dump on the whole market and target capitalisation not individual company stocks on the basis of performance - at least in the first instance.

Permitting shorts up to say 10pc of traded volumes each day might be at acceptable limits...at least that way all those people with both a short account and a long account would have to part with "real" assets to dump the SP, not just a net position, long losses balancing short gains etc.

I think the power of derivatives is making it too much of a computer game and much less a process of facilitating efficient capital movements. All at the expense of the buy and hold brigade, particularly where the companies involved don't pay substantive dividends.