John Carney sums up the SEC’s short-selling proposals.
The SEC’s 5 Uptick Rules
Courtesy of John Carney at ClusterStock
The SEC’s five member governing panel approved five different short-selling proposals today. They will not be put out for a 60-day public comment period.
Here’s what the five proposals do:
Revive the Old Rule. This old uptick rule prohibited short-sales at or below the last quoted sale price. One of the new proposal, with some minor tweaks, would do the same.
Bid Test. Similar to the old uptick rule, except instead of requiring a sale at a higher price, this proposal would require a potential buyer merely to bid a penny higher. No actual sale needs to take place.
Circuit Breaker-Uptick Rule: No uptick rule would apply until a stocks value drops 10% in a single session. In such cases, the old uptick rule would kick in.
Circuit Breaker-Bid Test: Instead of the old uptick rule applying after a 10% decline, the bid test would apply.
Circuit Breaker- "Stop Trading" Rule. Completely bans short-selling in a stock after a 10% decline.
See Also:
