Bankers are urging the SEC for an emergency ban on short selling.
Last week, bankers began to raise concerns of manipulative trading, particularly into abusive short selling.
Reuters reported that the White House had vowed to monitor the possibility of illegal short selling as shares in the banking sector plunged.
PacWest Bankcorp (NASDAQ:PACW) shares were able to recover after a nasty plunge, however, shares of the bank are still down more than -43% in the past trading week and more than -74% this year-to-date.
Blockchain Daily says industry experts, such as analysts at JPMorgan, the financial giant that recently acquired First Republic Bank from government receivership, have anticipated that Washington will be compelled to implement further measures.
One such measure being considered is the imposition of an emergency ban on short-selling, a practice utilized to speculate on declining share prices of banks.
Additionally, suggestions have been made regarding the potential expansion of deposit insurance as a preventive measure against bank runs.
In a more drastic scenario, regulators may even explore limitations on the dissemination of certain information on social media platforms.
Limitations on social media regarding information is going to be an extremely sensitive topic for the majority who are against censorship on these platforms.
Will the SEC Temporarily Ban Short Selling?
The increased short-selling activity has triggered some calls for a temporary ban, but an SEC official told Reuters on Wednesday the agency was “not currently contemplating” such a move.
Banning short selling would be just as a direct violation as preventing investors from buying or going long — something we saw during the ‘meme stock’ frenzy when brokers removed the buy button.
Regulators might need to look at dark pool volume and perhaps limit usage.
Another measure regulators may take is to look at the possibility of naked shorting and hold culprits strictly accountable.
Earlier this month, Citadel deemed retail investors as ‘conspiracists’, but now even the banking sector is raising concerns about the same issues retail investors have been raising red flags about for years now.
The retail community is concerned that the SEC will only cater to the banking sectors needs.
Retail investors have urged the SEC to look into naked short selling of companies such as AMC Entertainment, GameStop, Mullen Automotive, and many others.
Dark pool abuse has suppressed the true demand from retail in the lit market.
Chairman Gary Gensler is well aware of all of these issues — in fact, dark pool trading has risen ever since the Chairman took office in 2021.
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