Hi Roh,Whilst in the trade halt last year I noted the changes in...

Hi Roh,

Whilst in the trade halt last year I noted the changes in CDU short positions. Constant changes each day to the numbers whilst there wasnt a single share traded on ASX due to the suspension. At that point I realised these guys don't cover on market.

Lots more about this in relation to CDU at link below.

http://www.scribd.com/doc/71993719/5-1-Short-Position-Update-Nov-1-2011

"...Throughout the period of suspension, significant fluctuations in daily open short positions occurred. ie The registry was quite active even though the company wasn’t trading.

Presumably Off Market transfers were responsible for the activity in an attempt to cover, or at least manage, exposed short positions.

The fact that short positions can be covered Off Market is an issue that invalidates the philosophy behind shorting in the first place.

Shorting is sanctioned because it is meant to facilitate natural price discovery in the market.
Shorters who make the correct call on an overvalued share prices ensure that prices retreat to appropriate levels, but alternatively, shorters who call share prices incorrectly should have to re-purchase shares on the market helping to restore correct pricing levels.

However we rarely see shorters doing that, and when cover is needed it seems to takeplace Off Market with no price discovery taking place.

As such there is an argument claiming that the way a lot of shorting is implemented is simply one of the tools used to manipulate share prices."