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Hedge Funds May Reduce Volatility

10-10-2008

The record price swings experienced in the market may settle after the end of a three-week ban on short selling financial stocks, Bloomberg News reports.

Since the Securities and Exchange Commission started the rule Sept. 19, volume on the New York Stock Exchange dropped 35% and the Chicago Board Options Exchange Volatility Index surged to 57.53 yesterday, its third straight record. Options on the VIX, as the volatility gauge is known, imply it

The SEC barred short sales of almost 1,000 finance-related stocks in a bid to curb speculation after the ceos of Lehman Brothers Holdings Inc. and Morgan Stanley accused hedge funds of driving down prices.

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