# SEC buy-backs eased to counter short-sellers

By the day after the attack, it became clear that the regulator was not going to make any explicit rulings. “We don't want to artificially restrain the market,” said Harvey Pitt, chairman of the SEC. Apart from the immediate tumble in stock prices that kicked-in as the horrific images of Tuesday’s tragedy flashed across dealing room TV screens, it seems that a subsequent gentleman’s agreement between traders to refrain from aggressive activity has so far prevented equity markets from going into a full-on freefall.

However, federal regulators are aware that short-sellers may send already bearish markets plummeting and are gambling that temporarily easing buyback restrictions will prove a supportive measure. Usually, corporations are prevented from trading more than a specified daily volume of their own stock. The SEC hopes that by relaxing usual limits, stock prices can be supported and cash pumped into the system – ensuring liquidity. Buybacks are critical to market stability, according to Michael Oxley, chairman of the House Financial Services Committee. Many corporates have already pledged to enter into large buybacks. For example, Cisco Systems said last Thursday that it plans to buyback up to $3 billion worth of stock. These have been trying times for equity options traders as well. Many traders had hoped that because of the four-day options market closure last week, authorities would extend the September options expiration cycle. But hopes were to be quashed. Last Friday, the Options Clearing Corporation – the organisation responsible for processing and clearing options traded on the US’ options exchanges – confirmed that the expiration date for equity and index options will remain Friday September 22. The OCC’s statement simply said that it “has no authority to extend options expirations". So despite the cessation of trading, September options continued to lose time value. When the opening bell chimes this morning to signal that the NYSE is back in business, equity options will have four days’ time decay priced in. Back in the equity markets, the sheer scale and ferocity of the terrorist attack seems to have galvanised market opinion. It is expected that hedge funds and other short-sellers will find resistance, irrespective of regulation. By last Friday, US pension funds were asserting their intention to support the markets. Representatives from the National Association of State Retirement Administrators – a coalition of some of the largest US pension funds – said that they would buy stocks, should the short-sellers strike. Whether such action can counter hedge fund activity remains to be seen. But the Nikkei’s 5.04% tumble to close at 9504.41 – a seventeen year low – does not instil much optimism. • LinkedIn • Save this article • Print this page Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content. To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe You are currently unable to copy this content. Please contact [email protected] to find out more. #### More on Exchanges ###### Celebrating 20 years of innovation – Hong Kong’s ETF market today ###### Asia’s ETF assets on the rise – HKEX presents the results of Asia ETF survey 2019 ###### NYSE Offers Exchange-Calculated Bitcoin Index, with More to Come ###### Deutsche Börse to set up Europe's first multi-asset RMB platform ###### Exchange Revenue Figures Rise, Fall; Data Revenues Continue Steady Increase ###### Lift-off for ASX Aussie dollar swap clearing business ###### Exchange Data Revenues Make Positive Start to 2015 ###### CME looks to local banks for FX liquidity in emerging markets #### Risk management ###### Nasdaq whacked with$36 million fine over Aas default

Swedish regulator’s fine poses serious questions over default management and margining, while providing few answers