Q&A: Q As somebody who purchases shares on a regular basis, I would like to find a reference for the amount of shares which are shorted in a company when I am purchasing stock.
As we know the amount of shares bought is easily identifiable. Any reference to such a source of information would be welcome.
Mr MT, Dublin
A Shorting of shares has become the bane, not just of investors, but of companies themselves. It has also become a matter of serious discussion with regulators globally.
Effectively, shorting a share is betting against that company. Short sellers borrow shares from long-term stockholders and sell them in the hope that the price will fall. This then allows them to buy them back more cheaply, return them to the original lender of the stock and make a profit.
Naturally, this does not appeal to those companies targeted by such activities. Aggressive short selling can undermine a company that, otherwise, is operating reasonably well.
More significantly, from the point of view of the market as a whole, is the lack of transparency involved. I was discussing this with colleague Simon Carswell, who writes occasionally on this subject. He notes that there are few statistics available publicly (and for free) that show the level of short selling in Irish stocks.
Brussels-based securities settlements firm Euroclear provides monthly figures on the average percentage of a company's stock on loan. While they do not provide an accurate gauge of short selling in particular stocks, they do reflect general trends, showing the companies most susceptible to short selling.
For example, the stock on loan for all four listed Irish banks - AIB, Bank of Ireland, Anglo Irish Bank and Irish Life & Permanent - has been rising steadily since the start of the year.
This would indicate that the level of short selling on Irish bank stocks has increased over the course of the year. Short sellers, who make profits on the deterioration in a share price, have made substantial gains over the last seven months as Irish financial stocks have fallen 50 per cent since the start of the year.
Euroclear and others provide more detailed day-to-day information on stock on loan data. However, the subscription charges for this information are substantial - in the tens of thousands of euro - and thus only viable for very large organisations.
Q Last week you wrote that 20 per cent Dirt is full and final taxation on deposit interest, but this is not the case where I am concerned. I pay tax at the 41 per cent rate and while I get credit for the 20 per cent Dirt already deducted from the interest I have earned, the Revenue deducts a further 21 per cent when I declare the interest in my annual tax return. I am 75 years of age but this does not seem to make any difference. Can you clarify?
Mr SH, Dublin
AOn the issue of your age, pensioners are only exempt from deposit interest retention tax (Dirt) where their income is also below the income tax threshold - a situation that clearly does not apply to you.
On the "further taxation" by the Revenue, this is a regular headache for readers.
While it is true that the full amount of interest received subsequently appears on the balancing statement you receive from Revenue, it is also the case that, in order to ensure no further income tax will be charged, the standard rate tax band on the balancing statement has been extended by the same amount. Your tax credits figure will also be adjusted to recognise the fact that the Dirt has already been taken at source. So they are taking away the money with one hand and repaying it with the other. Confusing as that is, you are no worse off in the end.
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Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
