SEC's Restrictive New Short Sale Proposal --- NOW is your only chance to influence it

Good Post! If the proposed restrictions do not apply to market makers, specilists etc. then this creates an apartheid caste system within the market. How ironic that the Dem's would bestow Wall Street firms with exclusive rights over average citizens in the marketplace? Could there be an equal protection challange to this if it is implemented? After all, the retail investor should be entitled to an equal playing field in terms of execution
versas institutions.

 

In its current form its not IF there are exceptions its right there in the proposal.

I would point everyone to read Section B page 9 where the exceptions begin (I actually suggest people read the whole thing so you can be informed directly)

"In the Proposal, the proposed modified uptick rule and the proposed uptick rule included types of short sales that would not be subject to the requirements of the proposed rules.28 For example, the proposed modified uptick rule would require that a trading center’s policies and procedures be reasonably designed to permit the execution or display of a short sale order marked “short exempt” without regard to whether the order would otherwise be impermissible.29 The proposed uptick rule included a number of exceptions to its price test restrictions on short sales that, for the most part, paralleled the provisions in the proposed modified uptick rule relating to short sale orders that could be marked “short exempt.”"

Here is some of the excptions on page 9 and 10.

Whether requiring a policies and procedures approach, or a prohibition approach, the alternative uptick rule could also include “short exempt” provisions or exceptions for: (i) a seller’s delay in delivery as set forth in Section III.A.2.b of the Proposal;32 (ii) odd lots,

Page 10

as set forth in Section III.A.2.c. of the Proposal;33 (iii) domestic arbitrage, as set forth in Section
III.A.2.d. of the Proposal;34 (iv) international arbitrage, as set forth in Section III.A.2.e. of the Proposal;35 (v) over-allotments and lay-off sales, as set forth in Section III.A.2.f. of the Proposal;36 (vi) transactions on a VWAP basis, as set forth in Section III. A.2.h. of the Proposal;37 and (vii) riskless principal transactions as set forth in Section III.A.2.g. of the Proposal.38

The last line of in Section B page 10 sums it up pretty well that this restriction is to be placed on YOU and ME and NOT on Wall street market makers, Specialists, Option market makers and basically in a nutshell the Wall st insiders. Every one else can take a second class seat and wait in line

"We ask for comment on the scope of any such exception and the conditions that should be imposed to ensure that it is used only for bona fide market making." (SEC words not mine as can be seen on the SEC website)

From my view I see this as Wall St paying off politicians(primarily congressional) and they are not paying back by putting pressure on the SEC to allow them to step in front of the "outsiders". Its no secret that the SEC is under pressure to "do something" and proposal everyone wins. The MMs get to make more money, the politicians get more political contributions, the SEC gets to crack down on what "everyone knows" causes the market to go down and the average trader, well I guess they get screwed as potential profits that they could be making are now reserved for a select group.

On a different note I almost never short on what would not be an uptick as I fade price when shorting. So some could argue that I would not be harmed much (if at all ) by this proposal with the way that I currently trade. Wo why do I care?? Because tomorrow I may find a profitable setup that does include it.

Why anyone would voluntarily allow their trading to be viewed as second class is beyond me. I find it insulting when someone proposes that the market is served by "bona fide market making" when a MM shorts a stock at will and the average trader can not.

There will be winners and losers with this and I think we can mostly agree on how we are going to fair against GS and the other big MMs when they get to stand first in line everytime.

Best to you guys next week

RW

 

the bottom line is that goldman and najarian and other members of the old boys club will get their way at the end of day.
libertarian posts and level playing fields are not the way the world works.

the small investor/ trader stepped on goldman's toes without an uptick rule. those halycon days will soon be gone.

goldman believes in rigged markets and obama believes in gov't dictates not in markets.
hold onto your wallet.

that being said u still send your comments to the SEC.

 

Wow you really do not get it, do you?

This ruling creates an inefficiency that can be exploited for prime risk/reward ratio trades. AKA a real edge.

When this passes, assuming this goes through, I will be on the phone with my acquaintances in the daytrading industry (at least whoever is left) to discuss what tools are available to take advantage.

 

I think you are completely wrong there. Elimination of the uptick rule actually benefited any entity heavy in HFT, like Goldman.

 

Down-tick rule works even better for you. Maybe you need to start lobbying for this one.

 

Ok well you can either start preparing for what is actually good news if you are a daytrader or you can continue being an idiot.

Your choice.

 

Right, the wider the uptick the better. As a matter of fact it should be so wide that even anaconda won't get a fill. So much for taking advantage of the uptick inefficiency.

 

goldman was successful with HFT even when there was an uptick rule. HFT is on the way out. exemption from the uptick rule for market makers, arbitrage activity etc will be an annuity for GS.