Traders say the proposed ban on "naked" trading in the $26.4T credit-default swaps market would...

Traders say the proposed ban on "naked" trading in the $26.4T credit-default swaps market would have the unintended consequence of making it more expensive for companies to borrow and reducing liquidity. Assuming you believe that speculation increases market liquidity. Tyler Durden at Zero Hedge doesn't.

Comments

[Tom Au, CFA]

A ban on "naked" shorting would have the consequence of reducing liquidity. But perhaps that's not an UNINTENDED consequence, for other reasons.

[ERCaptain]

Risk has been introduced into the markets in many ways. When CMOs were first being created the benefits were tauted -- increased liquidity -- less expense. There is some truth... but eventually the CMO market also ushered in a tremendous amount of risk.

Yes TraderMark -- and it the argument is usually packaged in such a way to make it look like the traders are doing the markets a favor.

"increasing market liquidity"
"more expensive for companies to borrow"

"Naked" trading is doing the whole market a big favor and we should be thankful for it?

Give me a break. Prudent regulations needed to avoid perdition that has come before (and will again) on the heels of theft and corruption.

[TraderMark]

p.s. MAYBE borrowing costs NEED to be higher in this country. For individuals and corporations

when you actually have to pay for something instead of getting it nearly free you tend to actually think about the consequences and it would lead to better decisions.

When you are basically handed "other people's money" for little to almost no cost, you don't act quite the same.

So I am for HIGHER costs of BORROWINg for everyone - lets SLOW down the economy and stop it from bubbling every 4-6 years, and then crashing.

I know, speculators would not be able to make hot money day after day under my regime. I'm sorry.

On Jul 24 01:12 PM TraderMark wrote:

> Personally I am sick of the same 'rationale' (excuse) for anything
> that cleans up markets
>
> So if I cannot take life insurance out on someone ELSE, then proceed
> to shoot them, it would harm the markets? Right.
>
> And how exactly did "markets" function before all these innovations?
> Were we SO backwards 20 years ago?
>
> Please.

[TraderMark]

Personally I am sick of the same 'rationale' (excuse) for anything that cleans up markets

So if I cannot take life insurance out on someone ELSE, then proceed to shoot them, it would harm the markets? Right.

And how exactly did "markets" function before all these innovations? Were we SO backwards 20 years ago?

Please.