US-Turkey relations have dropped to freezing point, and Turkish lira plunge has not diminished.
On Monday morning, the Turkish lira's exchange rate against the US dollar plummeted again, touching 7.24 at one point, falling below the 7 mark for the first time. The final day fell 7.57%. With the intervention of Turkish central bank, the decline narrowed. As of the time of publication of China Securities Regulatory Commission, the US dollar against the Turkish lira was around 6.9.
Traders are in a serious bearish mood.
According to Bloomberg News statistics, senior traders have bought Turkish lira put option contracts, and the January-term lira/USD risk reversal indicator (short lira relative to the cost of paying more for long) rose 5 percentage points last week, hitting a new high since 2011. The panic in the foreign exchange market has also dragged down the Turkish stock market. Türkiye's BIST 100 index fell to 5% on Monday.
In order to maintain the market, the Turkish Central Bank issued a statement saying: "The market and prices will be closely monitored, and all liquidity required to banks will be provided, and all necessary measures will be taken to maintain financial stability."
According to Bloomberg , the Istanbul Exchange of Turkey said that the increase rules that will be implemented in May will also be implemented on BIST-100 stock short trading starting from August 14.
The past and present life of the report and present life
The so-called report and rise rules, also known as the rise and short selling, that is, the short selling price must be higher than the latest transaction price. The reporting rules, bare short selling and margin rules constitute the three main rules of margin trading .
Generally speaking, investors have the urge to buy and sell as they rise, but overall, the lower the securities price falls is much easier than rising. If the short selling quote is not restricted, the influx of large-scale short selling orders can easily accelerate the rapid decline in securities prices. This rule is mainly to prevent market abuse and market manipulation caused by short selling trading .
According to industry insiders, this rule originated in the United States, but the United States has gradually canceled the promotion rules in the pilot project since 2005, and completely abolished the promotion rules in 2007. After the financial crisis, there were widespread calls for resetting the rules for upward re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establishment re-establish However, the SEC exempts some special circumstances, such as trading on ETF, that is, short selling of ETFs does not require compliance with the "short selling quotation increase rules".
The Hong Kong region of my country canceled the reporting and promotion rules in 1996. Later, after the Asian financial crisis in 1998, the short selling price rule was implemented again on September 7, 1998. Since then, the Hong Kong Securities Regulatory Commission has also considered lifting the restrictions in 2007, but has not been implemented so far. This rule is generally not set in short selling transactions in Europe.
In the early stages of implementing margin trading, my country's securities market also strictly implemented the rules of raising the price to regulate the behavior of short sellers. However, in 2015, in order to reverse the lame situation of "two-income financing", the China Securities Association and four other departments jointly issued the "Notice on Matters Related to Promoting the Development of Short-Treasury Business" (hereinafter referred to as the "Notice"). One of the main measures is to stipulate that investors' declaration price for selling ETFs with margin trading can be lower than the latest transaction price. At that time, the industry believed that the "Notice" loosened the short-selling quotations of ETFs. Improving the market short-selling mechanism in this more roundabout way can also achieve various benefits of the short-selling mechanism to the market, especially to greatly improve the pricing efficiency of the A-share market.
This short sells none of the short sells
When the international financial crisis swept the world in 2008, regulatory authorities in many developed countries eased the market impact by restricting and even banning shorting of certain stocks.
But the ban on air has brought some unanticipated serious consequences. Regulators and market participants hope that the air ban will help stabilize the market, stop the market from falling, and reduce market volatility. However, all these expectations were disappointed. Christopher Cox, former SEC chairman, pointed out just three months after the ban on air: “If we knew what would have happened at that time, I believe that the SEC would not make a decision to ban short selling after weighing the pros and cons."Just months after Cox commented on the ban, his successor Kathleen Casey pointed out more specifically: "The ban has caused significant market chaos and distortion, which affects a wide range of businesses in the financial industry and a wide range of market participants." We now know that for an already very sensitive market environment, this emergency measure itself adds more uncertainty, and this uncertainty will make the market more unstable. "
It should be pointed out that Turkey and the United States both restrict short selling in margin trading, rather than restrict short selling in stock index futures.
In 2015, domestic public opinion blamed the market decline on "stock index futures short selling". Industry insiders said that in the past three years, stock index futures have almost become "sweet ribs", but the stock market still has risen and fall, and there is no so-called "restricted short selling in stock index futures, and the stock market has been rising." It can be seen that the rise and fall of the stock market has not necessarily been linked to stock index futures.
"In 2008, the financial tsunami triggered by the US subprime mortgage crisis swept the world. Many countries and regions have adopted measures to restrict short selling in the spot market, especially naked short selling, but there is no ban on the stock index futures market. Of the 17 countries, 12 have issued bans on bare short selling, but none of them have restricted stock index futures trading. On September 15, 2008, Lehman Brothers declared bankruptcy. At the worst time of the crisis, the trading volume of stock index futures increased significantly. On September 16, 2008, the S&P 500 mini contract was sold at 6.08 million. Calculated from the index points on the day, it is equivalent to the stock index futures market providing an additional US$360 billion in liquidity to the spot market, which is more than the total trading volume of the New York Stock Exchange and the Nasdaq market. "The aforementioned industry insider explained to China Securities Journal.
This article is from China Securities Journal
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