NYSE Euronext study: Corporate issuers favour new rules on short selling

22 October 2008

Senior management of public companies generally view the practice of short-selling of stock to be harmful during periods of market volatility and favour the implementation of new rules and disclosure requirements, the study finds.

Senior management of public companies generally view the practice of short-selling of stock to be harmful during periods of market volatility and favour the implementation of new rules and disclosure requirements that protect the interests of issuers and shareholders, according to a new study on short selling conducted by Opinion Research Corporation on behalf of NYSE Euronext.

 

The survey among corporate issuers in America and abroad follows the Oct. 8, 2008 expiration of the SEC's emergency order that banned short-selling in hundreds of financial companies. A total of 438 chief executive officers, chief financial officers, and investor relations officials of public companies listed on NYSE Euronext exchanges and Nasdaq responded to the survey, which was conducted during the week of Oct. 14, 2008.

 

Overall, 75% of respondents favour restrictions on short-selling activity during periods of stock price volatility and 85% recommend re-instituting the ‘tick-test’ rule as a means to instill market confidence. Moreover, 92% of respondents believe investment managers should publicly disclose their short-selling positions.

 

“The corporate community is clearly concerned about short-selling, particularly naked short-selling, and want regulators and exchanges to apply more rules, such as a new ‘tick-test’ or circuit breakers, and disclosure to protect companies and shareholders,” said Jeff Resnick, President of the US Group of Opinion Research Corporation. “Many respondents, noting the inconsistency of disclosure requirements for issuers compared with those for hedge funds and other businesses, say greater transparency in short-selling is essential.”

 

Press release

Short Selling Study: The Views of Corporate Issuers

Short Selling Study: Additional Comments 

 

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