Submitted on Saturday 17th May 2008
Curse of the Blue Leanie
19th March 2008 story first submitted
It almost seemed like history repeating itself yesterday when the current occupant of a high tech glass building in Aylesbury, HBOS was rumoured to be going to the wall. Traders sensing market jitters about the Big Five after the collapse of Bear Stearns in the US, allegedly released rumours about the HBOS group, that includes Bank of Scotland and Halifax Bank, throughout the day. Rumours included "Another bank has applied to the Bank of England for emergency funding" and " Bank of England Governor Mervyn King has cancelled a trip to the Far East"
The Bank of England took the unusual step of denying the rumours and the FSA announced that it will immediately investigate market abuse. Traders can profit by rumours by dealing on the back of them. As the rumour spreads the share price plummets presenting an ideal short term trading position which can then be capitalised on . As the share price dipped from about 480 to 400 before settling at around 430 there was more than enough volatility to create numerous trading opportunities. Any unusual trading patterns are likely to be investigated.
One method of capitalising on the situation is known as short selling
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Trader borrows shares from other investors, then sells them
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Repurchases the shares later at a lower price
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Trader then returns shares to investor
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Pockets the difference in the share price
If such actions are taken as part of a manipulated campaign then they are seen as market abuse
The Blue Leanie in Aylesbury a current home of HBOS in England was HQ to two previous big players in the UK financial services industry who had gone to the wall, Target Life and Equitable Life. For a short time yesterday the building was looking at three in a row.
