I expected the price to rise sometime in probably the next few months, not necessarily real soon...the goal of the proposal is to avoid such free lunch an incentive traders to make more short/medium term predictions.
Almost feels like there should be a "grandfathering" clause or something then, I would've never opened the shorts if I would have known that. I've already lost some BTSX getting margin called in the BitCNY market (due to the low liquidity, not the actual price on the exchange) and I wouldn't have risked more of my balance if I didn't think I could hold it until BTSX really took off.
I agree. It doesn't seem fair to apply this to existing shorts.
Agree. Existing short positions should be grandfathered in. Otherwise, it wouldn't be fair for those who took a risk to invest in their long-term views under the publicized rules that were in force at the time. What happened to the dictum that "everyone should get what they ask for" and not be forced to do something against their will?
More generally, forcing shorts to cover periodically doesn't seem like a good idea. It's a heavy-handed measure that is unlikely to increase liquidity much if at all. The reason is that it disincentivizes would-be short sellers too much. A short-seller who is forced to cover won't be able to easily re-short, as they have to compete with numerous others on collateral amount to carry out another short sale. The uncertainty of whether rolling into another short is feasible is disruptive to medium-term or long-term trading strategies of the bulls. It's an attempt to create greater balance between bulls and bears, but at a high cost and in an inefficient way.
Why not have shorts pay a modest amount of interest over time? (The rate should be modest and capped, perhaps tied to inflation). This way, shorts can choose how long to hold their positions. This would be like what happens in traditional markets with short selling of equity.