TSX:LSG.DB - Post by User
Comment by
basemetalon Nov 24, 2005 3:37pm
153 Views
Post# 9911577
RE: naked short selling is the answer
RE: naked short selling is the answer "The reason for permitting MM's to Short shares of the company ...was so that they could 'facilitate' the transactions of the market (i.e make it easier to trade and provide liquidity when it wasn't available, etc.)"
That is the rationalisation, certainly, but the MM's are in business primarily to make money for themselves. To that end, they "provide liquidity" both buying and selling ; they probably don't permit a large inventory of longs or shorts to develop, content to enjoy the benefit of the spread (plus commissions). Much like day-trading I suppose.
So why would anyone sell at these prices ? For the same reason as they buy at slightly lower prices, like today's !