Market abuse is a bigger risk than financial short-selling
Effort by regulators to ban naked short-selling on financial stocks is misplaced, as market abuse from short-selling on small cap stocks based on insider information is a more real problem, says Lombard Odier's hedge fund arm
Market disruption caused by insider dealing represents a far greater risk to the hedge fund industry than ad hoc regulatory moves in banning naked short-selling on financial stocks. That is because smaller stocks targeted by investors that trade on privileged information suffer from much greater price swings than financial stocks singled out for short-selling bans, due to the former's smaller market sizes, according to Aziz Nahas, chief investment officer of 1798 - Lombard Odier Investment
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