08:48 "Modified uptick rule" DJ reports four U.S. stock exchanges are banding together to urge the SEC to take up rules that limit abusive short-selling of stocks, according to a document obtained by DJ. Nasdaq OMX (NDAQ), NYSE Euronext (NYX), Bats Exchange and the National Stock Exchange on Tuesday will submit a letter to SEC Chairwoman Mary Schapiro proposing what they call a "modified uptick rule."... "We understand the public issuer's desire to have some short-selling protection in place," said Nasdaq OMX Chief Executive Bob Greifeld in an interview with DJ. "The intention is to know if there is a decline in the stock price, it's going to get to be onerous to speculate in short positions."... The modified version that the exchanges are proposing would implement so-called circuit breakers triggered after the price of a stock has declined by a certain percentage: the exchanges' letter to the SEC suggests 10%. This would permit normal market activity when stocks are trading in their natural range, and short-selling can benefit the market by increasing price discovery and liquidity, according to the letter. Short-selling would be restricted when share prices decline substantially and there's risk for abuse of the practice
Here is some more color: 07:41 SEC mulls updated uptick rule, according to sources - Reuters Reuters reports that U.S. securities regulators are working on an updated version of the so-called uptick rule to regulate a type of trading blamed for dramatic declines in stocks, three sources familiar with the matter told Reuters on Monday. The updated version of the Depression-era rule is expected to account for changes in the market, including the advent of decimalization, which allows stocks to be traded in much smaller increments, the sources said. Members of the U.S. Securities and Exchange Commission are scheduled to meet April 8 to consider short sale price test proposals... The three sources told Reuters that SEC staff were working on updating the uptick rule. Two of the sources said the SEC was considering at least two different types of price test options, along with a range of questions that could lead to yet another type of price test proposal. The three sources spoke on condition of anonymity because they were not authorized to speak on the SEC's behalf and because the proposals are still being crafted. An SEC spokesman had no comment.
Here is some more color: Major stock exchanges propose modified uptick rule; SEC to meet Apr 8 to consider proposals There have been a number of headlines out this morning regarding proposals for a modified uptick rule to regulate short-selling. First there was a Reuters report saying that U.S. securities regulators are working on an updated version of the uptick rule (see 7:41 comment for full details), and following that the major stock exchanges -- NYSE, Nasdaq, and BATS -- issued a letter to SEC Chairman Shapiro regarding a proposal to combat abusive short selling. The exchanges are proposing a slightly altered and modernized version of the previous Uptick Rule, which referred to as the "Modified Uptick Rule." Under this Modified Uptick Rule, short selling could only be initiated at a price above the highest prevailing national bid by posting a quote for a short sale order priced above the national bid. As such, the execution of a short sale would occur only at a higher price than the prevailing market at the time of initiation, and only on a passive basis (i.e., short sales cannot hit bids).