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Cazenove's Russell and Rice weigh in on shorting debate

For some, stock shorting is like a certain type of sandwich spread; you either love it or hate it.

Cazenove's respected fund management duo Timothy Russell and Citywire A-rated  Christopher Rice have been voicing their significant displeasure over the FSA's shorting ban on financial stocks.

The pair, who run the UK Growth and Income fund and European funds respectively as well as hedge funds at the group, have aired a list of grievances in a letter to the Financial Times.

The pair contend that the ban was imposed unilaterally, at short notice, and without consultation -creating uncertainty over what will be imposed by the 'panicked administration'  next.

More significantly, they believe the shorting embargo will cause chaos in the derivatives market, an increase in volatility as hedge funds scramble for new positions and ultimately lead to a reduction in market liquidity.

The letter claims that the distortions created by the ban will ultimately threaten London's position as a pre-eminent financial centre before concluding gloomily:'When authorities lose the confidence of seasoned investment professionals it is a sad day.'

Meanwhile, on the same letters page, a reader praises celebrated long term investor M&G's AA-rated Recovery Fund manager  Thomas Dobell for telling his investors that he 'has never and will never...engage in stock lending activities.'

This letter goes on to call for a public commitment from the market to follow Dobell's lead and pledge to no further stock shorting in a bid to boost financial stability.

Where do you stand on the great shorting debate?

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Related Fund Managers

Tom Dobell
Tom Dobell
153/155 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 24.50%
Timothy Russell
Timothy Russell
Christopher Rice
Christopher Rice
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