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Uncomfortable in squeezed shorts

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It is all very well to carry a big stick when you want to tighten market regulation but you must also have enough of a reach to hit the big offenders with it.

This is the greatest difficulty in the new legislation the Government has introduced to tighten up penalties for illegal short-selling.

The rules themselves remain pretty much what they were before. If you want to sell stock that you do not own you must first borrow it from someone who actually has title to it and you must tell your broker that it is a short sale.

Breaking the rules could now land you with a maximum $100,000 fine and two years' prison instead of $10,000 and a six-month term.

We shall dispense quickly with the immediate brokers' complaints. They say it will stop day trading because people who buy stock in the morning cannot sell it the same afternoon as they will not yet have taken delivery of it.

Very well, this may represent a glitch in the wording of the legislation. We may take the Government at its word that it does not intend to stop day trading, however, in which case this glitch is easily enough fixed.

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