No Uptick Rule allows shorts to increase panic?


Wasn’t that rule retired recently?

I mean the rule had been around since the 30s. Talk about removing it at the wrong time. I have no idea how much the rule would have affected stocks like BSC, LEH, CFC, FRE, FNM, etc… but it would have at least slowed the bleeding especially coupled with the naked-short ban. The financials were sitting ducks, waiting to be destroyed by the downward HF pressure. I think the uptick rule is especially important in the Pre-market/After-Hours trading where share price can be manipulated so easily on very little volume. Without the uptick rule the shorts have a much easier go of things.

bchadwick Wrote: ------------------------------------------------------- > Wasn’t that rule retired recently? Last summer. “Great” timing.

Well, then it probably does increase panic in the short term because people aren’t as used to thinking about stock performance with freer shorting rules. Over time, though, it ought to lead to more efficient pricing because prices aren’t as sticky downwards. I’d be interested in other people’s ideas on this.

I guess you can always short with futures, so really it means that amateurs can’t short as easily, which is probably a good thing b/c shorting is trickier to manage than long positions and has a different risk profile. The uptick rule probably affected dynamic hedgers more than ordinary investors.