No Uptick Rule on ARCA?

Discussion in 'Order Execution' started by ShortIgnorance, May 15, 2003.

  1. Just read on that there is no short sale rule on ArcaEx. Is this true??? Is this legit??? If so, I've been wasting money on Nasdaq bullets way too long.
  2. funky

    funky this for real?
  3. I wonder why this has not been published more. I wonder if most trading software recognizes this fact and will let you short on a downtick since most software has protections so that traders do not accidently or purposely short on downticks unless they have a bullet.
  4. I think this is because their computers system handle for you a workaround about the short rule, i.e. they will put your price as the bid+1¢, which is allowed for a short.
  5. Tide31


    It reads that way BUT, I would confirm the legitimacy of the content of that clip. I think what the author probably meant was that ARCAex leaves it up to the discretion of the trader to make sure trader shorts on a tick. (which is impossible considering the way NASDAQ stocks tick up and down on the bid). It has to be a level playing field and can't be that - depending on your execution platform, you might not have to abide by NASD rules?? Not plausible. I think they got it wrong.
  6. funky


    yeah, i haven't seen anything to back this up. anyways, with all the programs that create their own uptick, this problem is going away quickly...i wouldn't be surprised to see the SEC remove this rule in the future b/c of these new features in many popular trading systems.
  7. I am pretty sure (though it's admittedly a guess) that this would be the case. In the old days (pre decimalization), I had an Instinet terminal on my desk. I could virtually always get a short off on a nasdaq stock, because I had the thing defaulted to float my offer a sixteenth above the bid. I also sometimes would go with 1/32, but it was seldom necessary. (ah, the good old days when stocks had constant spreads...eights, even quarters).

    I was SOESing most orders then. The Instinet shorts were a "work around". Anyway, this created an uptick. Now, with stocks trading in fractions of a penny, creating an uptick is far easier. I happened to notice CSCO trading in 1/100th of a penny one day recently (unless I saw it wrong). Is that allowed?

    I have to admit that I didn't even know until I read the posts on this thread just now that people used bullets on nasdaq stocks!! I admit to being stunned! Why would anyone do this???

  8. It is true. The tick rules are exchange rules not SEC rules. It is because they are an Over the Counter exchange. They are not subject to the NYSE uptick rule. Nor are they part of the Hasdaq exchange and the bid test they implemented less than ten years ago. They have no obligation to institute their own rule. While they will not publish it, they won't hide it eaither because they want your business. For the bullet types, save your money and use ArcaEx.
  9. It's simple:

    ARCA bought the Pacific Stock Exchange......the other SRO ( self regulatory organizations) are exempt from the NASDAQ Up-tick rule.....ARCA is exempt because they own the PAcEx.....You can also short NASDAQ stocks on an uptick on CHX....many firms have joined CHX for just that reason....HOWEVER.....They will not allow you to short Listed securities on a down tick on these exchanges....They've been trying to close this loophole for awhile....In the case of CHX though, they do not want day trading orders so even if you firm was linked up to them you would not be able to get the orders off.

  10. I was kinda skeptical too, but they got it right. Just saw the Nasdaq's complaint to the SEC here.$699?mode=day
    #10     May 16, 2003