To ban or not to ban naked short, that is the question.

Before I proceed, let me clarify that I am AGAINST naked short, just like I am AGAINST naked long, i.e., contra trade.

If we are allowed to buy shares with no intention to own them (naked long), we should be allowed to sell shares with no intention to deliver them (naked short).

I guess Singapore Stock Exchange allows naked short because they want to make Singapore a vibrant trading place for international players. Naked short is still illegal in countries like Malaysia.

When the US market was trending up aggressively in 2006/7, the US government did not impose any ban on contra trade (naked long) to curb speculation, probably because everyone in the stock market including the law makers were happy making money. On the other hand, when the market was trending lower and lower, the authority tried all sorts of methods including a ban on naked short to rescue the market (or to rescue those connected few in the top).

In the local market during 2006/7, when it was super bullish with the help of syndicate players or big boys churning up stock prices, I did not hear small players complain about big boys' action. However, in the current bearish market condition, when the big boys kept shorting down the market, small players started to call for a ban on naked short.

I guess small players just have to learn from their mistakes and losses. They just have to swim along the big boys and play along their tactics. To do that, Technical Analysis is the way to go as cornering and fundamentals are already factored into Technical Analysis.