Data Explorers addresses how the short selling bans impacted the market and changing long/short strategies

FactSet’s latest podcast episode attempts to answer the question: Did the short selling bans of last fall positively or negatively impact the market?  

In Welter’s opinion, the bans clearly hurt. During the bans, he says there was a drop in short interest, “We did see more or less deleveraging or more or a drop in short interest at that time and over the same sort of time period we saw a significant drop in the overall drop in the price of the exchanges….The bans didn’t help support the markets.”

Welter also discusses how investors employing a long/short strategy have adapted to the changing environment as well as emerging industry trends, 

“The traditional long only players could be sitting on the sidelines, cause we are hearing that people are coming back into securities lending… but we're not seeing the same sort of enthusiasm in the lendable side of the securities lending market as we’re seeing that’s actually happening to the overall prices in the cash market.”

Listen to the full interview to hear Welter’s comments on how different international markets responded to their short selling bans, as well as a discussion of what he thinks is behind the rally and his best and worst case scenarios for the securities financing industry. Request a log in to the FactSet Insider website to sign up to see a complete listing of recent podcasts, and to find articles and webcasts on other topics in portfolio management. You can also listen to our podcast in iTunes, or read the full transcript.

FactSet’s goal is to provide our users and the public with perspectives and insights into the topics that drive financial markets. Through our podcast series, we offer a range of interviews with experts both from inside our company and from among our clients and partners.