August 19, 2008

Help for Short Sellers

In the wake of the recent SEC focus on naked short selling, former SEC Chairman Harvey Pitt is teaming up with the CEOs of two existing services to launch, a new web-based electronic stock lending and location service. As noted in this Washington Post article, the website will provide access to, a lending-borrow marketplace focused on hard-to-borrow stocks, and, which identifies demand for borrowed stocks and provides a historical database of short sale transactions. joins others providing similar services, such as,, ICAP and Quadriserv. If a pre-borrow requirement similar to the recent emergency order goes into effect for the entire market (as I discussed in the blog last week), these services are likely to see quite a boost in business.

A George Jetson Disclosure System?

The SEC has announced a news conference for today at 11:00 am eastern time with the tagline “SEC Chairman Cox to Unveil Futuristic Information Disclosure System for Investors and Markets.” While the term “futuristic” evokes images of hovercraft and floating treadmills to walk the dog on for me, perhaps what the news conference is really about is scrapping our old friend EDGAR. An article in this morning’s Washington Post notes that the SEC’s plans to replace EDGAR with IDEA, which stands for “Interactive Data Electronic Applications.” I have not heard of this IDEA platform before, but apparently its implementation will coincide with the phase-in of XBRL and will involve a move away from the “document” based approach of EDGAR. Tune in at 11:00 to learn more.

For some reason the notice for today’s press conference also reminded me of one of my all-time favorite John Prine songs, “Living in the Future.” The chorus goes:

We are living in the future
I’ll tell you how I know
I read it in the paper
Fifteen years ago
We’re all driving rocket ships
And talking with our minds
And wearing turquoise jewelry
And standing in soup lines
We are standing in soup lines

The Birth of a New National Securities Exchange

Yesterday, the SEC approved the application of BATS Exchange, Inc. for registration as a national securities exchange. As noted in this article from today’s WSJ, BATS stands for “Better Alternative Trading System” and the exchange expects to be up and running in about two months. The BATS electronic trading network was established in 2006 and already trades about 10% of the share activity on NYSE and Nasdaq-listed stocks. The firm’s goal as an exchange is to up its market share to 25%, potentially posing more of a competitive threat to the established exchanges.

– Dave Lynn