“More rule changes to come” on borrowing securities, OneChicago director believes

The US Securities and Exchange Commission’s (SEC) decision to introduce new restrictions on short selling will be the first of a number of rule changes, according to Abel Aronovitz, director for institutional sales at electronic single stock futures exchange OneChicago.

On Wednesday, the SEC voted to restrict the short selling of shares which fall 10% in one day, with short sales only permissible above the market’s best price. One leading figure in a major US lender told GSL.tv that this would “not have a tremendous effect” on the securities lending industry.

However, Aronovitz said that the move from the SEC “will impact the securities lending market” and that the decision could be the first of many from the SEC to affect the industry.

“In general, I think that more people are looking for what the rules of the game are going to be before they feel completely committed to partake in the marketplace. In some ways, this is a start towards establishing what the rules are going to be,” he said.

“That being said, it is only a start, there are more rule changes on how people can borrow securities to come. It will definitely have an impact, but what it will force people to do is to adapt the way they have been going about borrowing securities and they are going to have to look for alternative ways.”

The SEC had been lobbied by interested parties on both sides of the short selling argument, with its eventual decision being seen by many as a compromise between the two.