OCC Says SEC Rule on Short Selling Could Be Disastrous

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According to the Options Clearing Corporation, the U.S. Securities and Exchange Commission's ban on short selling could have "dire" consequences for U.S. equity markets.

"As written, this order does not allow for an options market maker exemption to ensure liquid and orderly markets starting on Monday. This will have dire consequences on the U.S. equities markets," Wayne Lutheringshausen, CEO of the OCC said on Friday.

Earlier on Friday, the U.S. Securities and Exchange Commission enacted a temporary ban on the short selling of 799 financial stocks in an effort to calm investor fear and markets in general.

The ban is in place until 11:59 p.m. EDT on Oct. 2, and can be extended 10 days or beyond if deemed necessary.

By Erik Kevin Franco and edited by Stephen Huebl
©CEP News Ltd. 2008