The Managed Funds Association and the Coalition of Private Investment Companies have written to Securities and Exchange Commission chairman Christopher Cox, urging the SEC not to extend it

The Managed Funds Association and the Coalition of Private Investment Companies have written to Securities and Exchange Commission chairman Christopher Cox, urging the SEC not to extend its emergency order on short selling beyond its expiration date on July 29, or beyond the current list of designated securities.

'While we recognise that the financial sector is undergoing an extraordinarily difficult period, we believe that these difficulties are the result of poor fundamental conditions and not a mysterious conspiracy or, more to the point, the inadequacy of current rules related to short selling,' says MFA president and chief executive Richard H. Baker.

'The commission's action here stands in stark contrast to its actions to protect retail investors from abusive short selling practices through the adoption of Regulation SHO, which was subject to extensive notice and comment. Short selling is a legitimate and valuable trading strategy as well as a vital component of providing price discovery and promoting efficient markets.'

CPIC chairman James S. Chanos says: 'We respectfully urge the commission not to extend this order in duration or scope. Such action would severely burden short selling activity, which the SEC itself repeatedly has acknowledged plays a vital role in the stability of securities markets. Artificial restrictions on short sales undermine the integrity of prices in our markets because they remove liquidity and, more importantly, healthy scepticism from the marketplace.'

The Managed Funds Association, whose members include hedge fund, fund of funds and managed futures fund management professionals, was established in 1991 as a source of information for policymakers and the media as well as an advocate for sound business practices and industry growth.

The MFA is headquartered in Washington, DC, with an office in New York. The Coalition of Private Investment Companies has members and associates that manage or advise on assets totalling more than USD100bn.