there ought to be a mechanism whereby anyone who owns shares of
a company is allowed to "opt not to make those shares
available to those who want to borrow them". After all, in
theory such shares are the property of the owner. One
either owns a stock or sells it.
If such a mechanism were in place, logic says there would be no
shares to borrow. After all, why would anyone who owned
of shares of a company (someone who presumably wants to see
the price go higher) allow their shares to be loaned out "for the
express purpose of shorting that company and trying to
drive the value of the stock lower"?? That would go
against their interest. Instead, owners would want to make
"loanable" shares scarce. No owner would loan their shares
out...institutions holding the "stock" on behalf of the owner would
be precluded from loaning out those shares...and as a result, no
shares would be available to short.
It is called a Cash account...they can never loan out your
shares in a cash account....that is why they always want you to
sign the margin agreements, even if you never use it, they
will.
I'm not against shorting but........
Posted by RichieD on 3rd of Oct 2011 at 01:59 pm
there ought to be a mechanism whereby anyone who owns shares of a company is allowed to "opt not to make those shares available to those who want to borrow them". After all, in theory such shares are the property of the owner. One either owns a stock or sells it.
If such a mechanism were in place, logic says there would be no shares to borrow. After all, why would anyone who owned of shares of a company (someone who presumably wants to see the price go higher) allow their shares to be loaned out "for the express purpose of shorting that company and trying to drive the value of the stock lower"?? That would go against their interest. Instead, owners would want to make "loanable" shares scarce. No owner would loan their shares out...institutions holding the "stock" on behalf of the owner would be precluded from loaning out those shares...and as a result, no shares would be available to short.
That's what a "free market" should be about!!
There is an opt out for loaning shares
Posted by perthx on 3rd of Oct 2011 at 02:26 pm
It is called a Cash account...they can never loan out your shares in a cash account....that is why they always want you to sign the margin agreements, even if you never use it, they will.
You can always cross out the 'hypothecation' clause
Posted by lessarda on 3rd of Oct 2011 at 02:03 pm
in your brokerage agreement. Whether the broker will accept and comply is another question.