11/08/2008 05:12 am ET Updated May 25, 2011

Short-Selling Ban Expiring: Did It Change Anything?

Few expect their return, on its own, to spark another precipitous plunge in the stock market. Financial shares have plunged 23 percent since the ban was imposed on Sept. 22, suggesting that the short-sellers might not have played such a big role in the declines.

The Securities and Exchange Commission took additional steps, which will remain in place, to hem in short-sellers, who typically borrow shares and sell them, hoping to buy them back later at lower prices and pocket the difference. The S.E.C. has shortened the length of time allowed to locate borrowed shares for short-sellers and will require investors to begin disclosing the stocks they short. That may discourage some investors from the practice.

Since the S.E.C. ban went into effect, borrowing shares has become more expensive, in part because some big pension funds and endowments have stopping lending stock altogether.

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