How is disabling purchases and broker-wide outages not bolstering hedge funds?
It's government intervention no matter how you look at it. Just because it's not a direct capital infusion does not make it any less bad
It's government intervention no matter how you look at it. Just because it's not a direct capital infusion does not make it any less bad
There was an immediate and emphatic appeal to the regulators, and the way the SEC works is often by encouraging self regulation. The CEO of the NASDAQ even went on air to ask for more SEC regulation.
This isn't unusual, it's pretty much how "government intervention" via the SEC, and a lot of other regulatory bodies, actually works.
For shorter term and more operational issues, pressure is the main toolkit.
There are very occasional "landmark" regulations, often legislated, that are explicit. EG Sarbanes-Oxley.
Day-2-day, the SEC works mostly by signalling. They might make a policy declaration, or send letters to CEOs. They'll note things in periodic firm reviews. Publicly raise an eyebrow. Take action against or investigate one firm and publish findings. Rarely are specifically worded edicts issued.
Regulating bodies are designed to work largely through pressure instead of (ironically) through regulations. This is by design. Regulators are usually created in response to firms having won the loophole cat and mouse games, and the prohibitive complexity of actual regulations. If government wanted rules, they can just legislate directly instead of delegating to a regulator.
"Compliance" is often about staying away from trouble by playing a sort of guessing game. It doesn't mean that it's "hands off."
> Regulators are usually created in response to firms having won the loophole cat and mouse games, and the prohibitive complexity of actual regulations. If government wanted rules, they can just legislate directly instead of delegating to a regulator.
Large motivation to create regulatory bodies is expertise and focus on one (or more related) subject, and these regulatory bodies often simply recommend to the government/legislators and do the management the law mandates.
IMHO this 'suggestive' mode of operation is not usual outside of finance. (I might be wrong though, I have never seen a full list of regulatory bodies.)
There are hedge funds on both sides of this bet. So this intervention is both helping and harming "hedge funds" in equal measure depending on what side they have taken.
https://financialpost.com/news/fp-street/rbc-online-banking-...
Is it? Do we have some information on that yet?
Why does disabling purchases help?
(It also prevents J. Naive Trader from buying into this train wreck and losing a bucket of money when the bottom falls out, which it will.)
The whole idea of the short squeeze is that the hedgefunds can't buy anything anymore and the lenders want their stuff back. And if they are still overshorted and the lenders don't like to bleed them first, before initiating the squeeze I don't think that this somehow hurts retail investors. Maybe it benefits the lenders who can nicely bleed both shortsellers and the WSB+muskalike-crowd, but at the current price, where the stock has actually gone up quite a bit but stabilized, it seems quite clear that this thing is decided by the lenders now. Do they want to play the crazy game for a near bankrupt company and demand their loans from Melvin or Co. (which would probably result in fast default and them not seeing a substantial amount of their shares again with the others reduced to a pennystock) or do they just sail along, taxing the narcissistic sociopaths on one side, while slowly selling off their actual stock to then be bought by those and returned to them. I guess they decided for option 2 and I think they are not as dumb and chaddy as they look to you ;).