new short selling rules

PocketChange · Mar 2, 2011

Probably stair step down at a slower pace. This should eliminate flash crash type price action.

Quote from ChkitOut:

sounds like stocks that are down hard will be thinner on the way down, causing even more volatile down moves when longs that want out will not have shorts covering. Who knows, its like six of one, half a dozen of the other. Bottom line is I don't think shorting has any real effect on the value of stocks.
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ElecEquity · Mar 3, 2011

I noticed this the other day when I was trying to short CEDC...called our broker and heard about this rule.

Not a huge deal. Noticed that it forces me to hold my shorts longer in these types of stocks because I know I may not get that price again.

Who shorts anyway? Go POMO!

ammo · Mar 3, 2011

Quote from AlexLutiera:

I don't know what is the Alternative Uptick Rule. I decided to search in my internet. i just want to share to the members when this rule was approved by the Sec.

SEC Approves the Alternative Uptick Rule

Securities Law Update
February 26, 2010

On February 24, 2010, the Securities and Exchange Commission ("SEC") approved amendments to rule 201 of Regulation SHO ("Alternative Uptick Rule") under the Securities Exchange Act of 1934, as amended ("Exchange Act"). The Alternative Uptick Rule restricts short sales in exchange-listed equity securities that experience a price decline of more than 10% on any trading day from the prior trading day's closing price. Once the 10% circuit breaker is triggered, the subject securities can be sold short only at a price uptick, i.e. when the price is above the current national best bid ("NBB"). This restriction will remain in place for the remainder of the trading day on which the circuit breaker is triggered and the following trading day. The Alternative Uptick Rule is designed to prevent abusive short sales that may be used to drive down the price of a security or exacerbate a market decline in a security.

The SEC has approved some limited exceptions to the Alternative Uptick Rule. We understand that the SEC will allow short sales regardless of the tick, even when the 10% circuit breaker is triggered, in the following situations: (1) a broker-dealer determines that the price of the trade at the time of submission was above the NBB and it has in place policies and procedures to monitor its short-sale activities pursuant to this exception; and (2) the person selling short is deemed to own the securities but delivery of the securities will be delayed. The SEC has also approved exceptions to the Alternative Uptick Rule for certain odd-lot transactions, certain domestic and foreign arbitrage transactions, overallotment or layoff sales, riskless principal transactions, and volume weighted average price ("VWAP") transactions. Notably, the SEC did not adopt an exception for bona fide market-making activities.

For assistance with any of the issues addressed in this update, please contact any one of the Bracewell & Giuliani attorneys listed on the upper right-hand side of this page.

http://www.bracewellgiuliani.com/in.../SEC_Approves_the_Alternative_Uptick_Rule.cfm
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lot of ambiguity in there for everyone ,sounds like we will be the only one' s it applies to

forsalenyc · Mar 3, 2011

Quote from AlexLutiera:

I don't know what is the Alternative Uptick Rule. I decided to search in my internet. i just want to share to the members when this rule was approved by the Sec.

SEC Approves the Alternative Uptick Rule

Securities Law Update
February 26, 2010

On February 24, 2010, the Securities and Exchange Commission ("SEC") approved amendments to rule 201 of Regulation SHO ("Alternative Uptick Rule") under the Securities Exchange Act of 1934, as amended ("Exchange Act"). The Alternative Uptick Rule restricts short sales in exchange-listed equity securities that experience a price decline of more than 10% on any trading day from the prior trading day's closing price. Once the 10% circuit breaker is triggered, the subject securities can be sold short only at a price uptick, i.e. when the price is above the current national best bid ("NBB"). This restriction will remain in place for the remainder of the trading day on which the circuit breaker is triggered and the following trading day. The Alternative Uptick Rule is designed to prevent abusive short sales that may be used to drive down the price of a security or exacerbate a market decline in a security.

The SEC has approved some limited exceptions to the Alternative Uptick Rule. We understand that the SEC will allow short sales regardless of the tick, even when the 10% circuit breaker is triggered, in the following situations: (1) a broker-dealer determines that the price of the trade at the time of submission was above the NBB and it has in place policies and procedures to monitor its short-sale activities pursuant to this exception; and (2) the person selling short is deemed to own the securities but delivery of the securities will be delayed. The SEC has also approved exceptions to the Alternative Uptick Rule for certain odd-lot transactions, certain domestic and foreign arbitrage transactions, overallotment or layoff sales, riskless principal transactions, and volume weighted average price ("VWAP") transactions. Notably, the SEC did not adopt an exception for bona fide market-making activities.

For assistance with any of the issues addressed in this update, please contact any one of the Bracewell & Giuliani attorneys listed on the upper right-hand side of this page.

http://www.bracewellgiuliani.com/in.../SEC_Approves_the_Alternative_Uptick_Rule.cfm
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this news is over 1 year old.......is this happening or just a speculation? when is it effective?

PropTraderMTL · Mar 4, 2011

Quote from forsalenyc:

this news is over 1 year old.......is this happening or just a speculation? when is it effective?
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It is in effect as of start of this month. I have encountered it a couple of times now. The one that really catches me is that it lasts till the CLOSE of NEXT TRADING DAY.

The stupid part is that for stocks around $1-$2 area this rule kicks in way too quickly. There should be a rule about the price of the stock. For example $1.11 stock moving to $1 kicks this rule in which to be honest is stupid. Not sure but I guess it applies sub $1 as well.

They will need to tweak this rule in the future

sprstpd · Mar 4, 2011

Another rule by the SEC to "protect" the investor, but is in fact a load of crap.

zdreg · Mar 14, 2011

affecting a whole bunch of stocks today.

zdreg · Apr 8, 2011

any interesting stories with the new rule?

Red_Ink_inc · Apr 8, 2011

Quote from zdreg:

any interesting stories with the new rule?
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Not really, but why it's in effect for 2 days once it's triggered is beyond me. Numerous times I have encountered a stock that is ripping to the moon but you can't short it on a downtick because the previous day it licked -10%.

sprstpd · Apr 8, 2011

Quote from zdreg:

any interesting stories with the new rule?
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It's a moronic rule just like the people who instituted it.