A few weeks ago I emailed the SEC regarding complaints (From Cramer and others) about the SECs elimination of the uptick rule. The following are excerpts from their response to me. Note especially the third paragraph. (Volatility is international) "The Commission's decision to eliminate the uptick rule was taken only after an extensive real-world analysis of the impacts and shortcomings of then-existing short sale regulation. The Commission's Office of Economic Analysis (OEA) studied the impact of the tick test by analyzing real securities, trading on live stock exchanges. Using one-third of the stocks in the Russell 3000 index, OEA created two groups of comparable securities, including both listed and NASDAQ securities. The control group was subject to tick tests or bid tests, while the other group of stocks was not. The OEA study, available at http://www.sec.gov/news/studies/2007/regshopilot020607.pdf, found that the elimination of the uptick rule increased the volume of short-selling, but did not increase overall short interest in a security. Many have attributed the increase in volatility since the third quarter of 2007 to the elimination of the uptick rule. However, the increase in volatility is an international phenomenon. Market volatility has increased significantly, not only in the United States, but in several countries in which price tests similar to the U.S tick test remain in effect, including Japan, Australia, Canada and Korea. We continue to investigate cases of manipulation in which short selling may play a role, and ask that you alert us to any evidence of manipulative conduct as soon as you become aware of it. "
The "uptick rule removal is killing the market" crowd is strangely quiet for now. Guess they are riding the wave of short covering combined with buying. They'll be back next correction. And his highness, Cramer, will be leading the charge.
ADAPT or perish!!!!!!!!!!! stop whining! Europe has never had an uptick rule... neither have the futures.. have the futures been ruined since they started? Give me a break and work on what you are doing wrong.. rather than trying to BLAME BLAME BLAME.. I agree there has been more volatility.. but I like VOl .. not too much of course, but healthy moves are good.. also if the rule was so bad then why has the market been rallying lately.. there was an also lot of fundamental news that was negative on credit etc.. pushed mkt lower... it would do tha regardless.. also you think the big money institutions and hedge funds couldn't just buy stock .. to get an uptick and then sell a shit load of it when they want to sell.. seriously focaus your energy on something you can actually change and stop whining and blaming laws regulations.. on problems with your own trading
When the uptick rule was in place some market participants could sell equities on a downtick or downbid , (i.e. specialist, market maker or hedge fund/institutional investor by putting up a "bullet"). However, individual investors couldn't sell short on a downtick/downbid. So individual investors were at a comparative disadvantage. With the elimination of the down tick rule, the playing field becomes more level. It's still not completely level but I think it was the right thing to do to get rid of the uptick rule. Now if the NYSE will change "fair and orderly market" to strict price and time order priority, then the playing field for equities would be even more fair.
Perhaps it'll be re-instituted after a(nother) horrendous decline in the markets, (were that to occur), so that once again they can apply preventative measures AFTER the damage is done. johnny-on-the-spot....I guess it's alright to go and start a war, (a misguided one at that) as a preventative measure...go figure. Destruction of value is working overtime, it seems.
Not unlike the "mortgage crisis", wherein a lot of Washington jackasses run around trying to solve a problem that already happened, under circumstances that are unlikely to repeat anyway for another 100 years. Honestly, it is a mystery and a miracle that anyone with an IQ above 90 would want to take any job in government. If it looks this bad from the outside, imagine how it looks from the inside.
I do not agree with you. Jobs with government are excellent. If you have a good IQ, you serve society (rather than the man), you have more job stability, and you have time to trade, and the salary is good. So do you have a low IQ that you did not see this or you are just repeating what you hear others saying (whom they heard others saying, etc)?
Thus in an earlier 'uptick rule' thread, I pointed out that increased volatility did not result from the absence of the old uptick rule. I am not surprised that the SEC confirms this. There is a lot of yabber blabber from people who are not well informed or simply not knowledgeable about markets. No one of reputation or substance in the markets would confide in Cramer other than to mislead 'The Big Mouth'.