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Emails are making the rounds today that highlight what the likely Washington response will be regarding Dark Pools and Short Sale Rule changes. In the past I feel we have made our views on Dark Pools known, specifically the difference between those that add value and those that do not, and the importance for size discovery; I will like to instead relay some thoughts I have regarding proposed short sale rules. Specifically, proposals are rumored to address: 1) Price Test. An offer-not-hit style price test is the likely price test. So one can short stock by offering stock, and not
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RMBS drops in minutes from $24 to $16 and back up to $23. The word is the move is the result of a “fat finger”. This illustrates, however, how market structure has changed the velocity in today’s equity markets. “Stop loss” market orders are dangerous in today’s world. Don’t let anyone fool you into thinking that today’s “automated” market makers, who get short sale location exemptions and other benefits, are a substitute for the stabilizing Specialists and Market Makers of just a few years back. It makes one wonder if the AMM’s should have those exemptions and benefits; it seems
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