Regulate short selling to tackle market manipulation

I REFER to the recent Business Times report on the conviction of a man who fraudulently induced others to trade (“Set up a Telegram chat group to trade shares? You may run afoul of the law”, BT, Oct 11). It can be reasonably deduced that the inducement was aimed at luring investors into a particular stock in order to profit by shorting that stock when it had reached a certain level.

A longer-term and more effective measure to deter such acts is for the equities market to possess an innate ability to naturally weed them out.

An ecosystem that continuously and judiciously balances opposing views for price discovery contributes to this ability. Currently, the system distorts and disrupts price discovery because it does not balance the costs of shorting with the costs of buying, thus tilting forces in favour of shorting. The problem is not short selling but the absence of a level playing field.