Saturday, November 19, 2011

How does a ban on short-selling affect the futures market?

For example, if you are short-selling a security, how does the implementation of a ban affect the futures market in terms of that same security? Does it affect the price, or the appeal of a futures contract?|||There is no current ban on short selling in any US market.





The US GOV/ SEC will not ban short selling. They may change the rules, enforce existing rules, but not ban it.





edit per emailed Q:


The question is hypothetical then? If so, I would argue that if short selling of listed securities was prohibited, and one could still short S%26amp;P cash futures, that the impact of stocks could still be affected.





If one can also just buy options and convert those into short positions that can still create short positions in stocks.





If short selling was banned on every market in the world collectively, then we would be creating an artificially controlled market, and thus no longer have a free market.

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