U.S. securities regulators are considering new short-sale restrictions with no exemptions for market makers, people familiar with the regulators’ plans said on Tuesday. The Securities and Exchange Commission is due to meet on Wednesday to vote on rules that would restrict short-selling in a company’s stock if that stock fell by more than a certain percentage, such as 10 percent, the sources said. The SEC is considering allowing legitimate hedging during the short-sale curb but no general exemption for market makers, the sources said. —Basically hide the bad news.
Passed 3-2. Can someone explain to me how this is any different from the uptick rule we had up until 2007 except with the uptick rule now kicking in after a stock has fallen by 10% (in a given day) instead of always being in effect? To me this just looks like a relaxed version on the old uptick-rule not anything new.
this sounds good to me. Better than the uptick rule, while acknowledging people go crazy on the down side…what do you guys think?
Short selling provides downside market efficiency. I think I preferred the uptick rule better, because this new rule seems to provide a false bottom to a stock. Also, some notable short sellers are saying this also will raise transaction costs.
adavydov7 Wrote: ------------------------------------------------------- > Passed 3-2. Can someone explain to me how this is > any different from the uptick rule we had up until > 2007 except with the uptick rule now kicking in > after a stock has fallen by 10% (in a given day) > instead of always being in effect? To me this just > looks like a relaxed version on the old > uptick-rule not anything new. You’re right re: relaxed; I would even go so far as to say VERY relaxed. Let me add the following: Since the short sell order needs to be sent with a price higher than the current bid price, short sellers cannot hit the bid with a market order. Without the ability to cross the spread, the short seller cannot take liquidity, only provide it. In other words, short sellers can’t jam the bids outright and take advantage of low bid liquidity. Nonetheless they’ll be able to sell at the offer. A long can still cover with a market order, so to some extent longs will “have priority” in a circuit breaker situation. Also, the circuit breaker remains in effect for the following trading day, in addition to the rest of the day.