Naked short selling is illegal. If you do not deliver the stock from a short sale, the buyer will force you to buy it in the open market. What you mean is ban short selling. Um, short selling has been around for hundreds of years. But maybe what you really me is stop a stock I own from going down? Not going to happen. You need to get out when things go wrong.
It may be illegal, but it still occurs. How about just re-implementing the uptick rule? It would make a lot of sense, especially to offer some protection for individual investors. Too bad the SEC beholden to the fast money Wall Street pros who benefit from the increased volatility.
Disagree. Short selling is an action of many multiples of selling bets to drive down the stock price. The equivalent would be to allow the same market manipulation by buy orders. Banning all short selling would return market prices determined between willing buyers and sellers who complete transactions with delivery. Allowing short selling tilts the market to excessive manipulation by driving down the prices.
The answer to why short selling and illegal naked short selling are both permitted is regulators favor big money hedge funds and investment banks who are the big volume in these transactions. It is one of the reasons the stock market rules oppose small investors in favor of big investors.