4 ms·
The morning of 8/24 was more complicated than that because lots of these stocks/etfs had hit their Reg SHO thresholds, which restricted the ability short sell i
by minimax 11y ago
The morning of 8/24 was more complicated than that because lots of these stocks/etfs had hit their Reg SHO thresholds, which restricted the ability short sell into a resting bid.
https://www.sec.gov/divisions/marketreg/rule201faq.htm https://www.sec.gov/divisions/marketreg/rule201faq.htm
- mrchicity 11y agoAnd when market-makers lose an option for managing their risk (hitting bids in a related security), they'll naturally charge a wider spread to buy, further diminishing liquidity that would stabilize the market.
- dnadig 11y agoSHO limits don't apply to bona fide market making, I'm nearly certain. But regardless, you would expect the inability to short by non-MMs would actually keep ETFs and Stocks from hitting their breakers, not making it worse. By definition, you remove sell-pressure. Until 10AM that day, the problem was zero buy-pressure. No bids at all to speak of. http://www.etf.com/sites/default/files/images/2_rspsurveyor.jpg http://www.etf.com/sites/default/files/images/2_rspsurveyor....