In a previous report I mentioned the usefulness of short selling; selling borrowed securities, in the hope of buying back the borrowed security at a lower price in the future.
Without
short selling, markets would become overvalued and would not be
priced as rationally as they generally are.
However,
during financial meltdowns or other emergencies which may affect
markets from properly functioning, it may be necessary to temporarily
stop such trading.
The
SEC has placed restrictions on the use of short selling after a
security is off 10% on the day. Unwise, because policing is difficult
with the rise of lightning-fast computers. (See the Earl J. Weinreb
NewsHole® comments.)
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