July 24, 2008
Full and complete enforcement of the requirement to actually locate stock to borrow before a short sale is long overdue. I applaud this first effort to improve the transparency and faith in our equity markets.
But this must be the first step towards extending this requirement to all publically traded stocks.
In addition, I do not think that market makers ("MM") or otion market makers ("OMM") should have an exemption other than for a day or two at the most. Think about it - if the OMM can sell stock short without a borrow to offset his risk on an option position, then short sellers can simply use options to pound stock proce down. This is simply not right, and should not be legal. The MM and OMM should be required to actually locate stock to borrow before a short sale just like anyone else.