zerohedge.com 04 Jun, 2021 20:15 am

Wall Street Banks Clamp Down On Hedge Fund Shorting Of Meme Stonks

Wall Street Banks Clamp Down On Hedge Fund Shorting Of Meme Stonks
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

As a result, hedge funds and other institutional investors who wish to short the "memes" now face higher collateral requirements or are simply prohibited from shorting certain stocks.But on the other hand, if hedge funds pull back on short bets due to the new restrictions, the Reddit crowd won’t have as many opportunities to chase short squeezes.Of course, hedge funds will merely find new and more creative ways to short, such as using puts or even TRS.Ironically, with this decision prime brokers may hasten the emergence of even more Archegos-style blowups now that hedge funds will be force to hide their short exposure under the table.

Wall Street is sticking it to.Following Wednesday's decision by Jefferies' Prime Brokerage to suspend short sales in meme stocks such as AMC, Gamestop and Microvision, other banks are following through with steps of their own, and as Bloomberg just reported that more of Wall Street’s top brokers are quietly tightening their rules for who can short the most-popular meme stocks which have soared in recent days.

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