Tuesday, September 29, 2009

The uptick rule

Wall Street is now taking on the proposed "uptick rule."

Vanguard, which makes money by lending out securities to shortsellers, had this statement by its CIO, Gus Sauter, in regards to the reinstatement of the uptick rule: "We've always felt that short-sellers enhance liquidity and provide a positive impact on the marketplace."

The trading houses with the black boxes, and Goldman Sachs, of course, are also against it. Look what Citadel had to say: "...lead to greater disruption of legitimate trading activity and even greater market costs.

High frequency trader Getco had this: "..make today's equities and options markets less efficient, less liquid and more costly."

For who?

Today, SEC sleuth, Mary Shapiro, (the one who proposed the $33 million fine for BAC when they hid $3.6+ billion of bonuses for Merrill Lynch that was summarily rejected by Judge Jed Rakoff) who never found a Wall Street back pocket that she didn't like, is having a hearing on security lending. Remember how AIG tossed billions down that hole? Or how State Street had to hid losses from their security lending program? Or CALPERS $634 million loss on their security lending schemes?

What do they need to know?

The custodians of your assets, the mutual funds and trust banks, have been lending your stocks out for the extra juice. And then they've been blowing that money in a Wall Street program set up to invest that juice.

So now Mary needs a hearing.

Because Wall Street needs to protect all of the above!

The webcast of it is here. I doubt if they'll need an extra bandwidth for this!

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