Sunday, May 27, 2012

Short Selling in China

Coverage about “the whale,” read the JP Morgan Chase trader named Bruno Iksil, got me thinking about fundamental reforms that would once more turn financial trading into genuine investment and do away with Casino Wall Street. One such idea is to prohibit short sales of anything. If you sell something, you ought already to own it, and be ready to prove that you do. Then the thought occurred. I wonder if short selling is permissible in China.

The short answer is Yes, but the fuller answer is more interesting. It is legal there but only since 2009. And such activity is only permitted to be carried out by 11 brokerage firms. Such trading is now going on under a trial, under the auspices of the China Securities Regulatory Commission, and it may be stopped in the future. Same holds for trading on the margin.

Interesting. Before the capitalist monster eats a culture, it first sells it short. I am hoping for the nixing of this “trial” in China. If not, I confidently predict another Great Proletarian Cultural Revolution in the future. “Strike the enemy down on the floor and step on him with a foot!” Ah, the memories…

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