Short selling tick test is history.

Discussion in 'Wall St. News' started by indahook, Jun 15, 2007.


    The Securities and Exchange Commission has unanimously voted to end the so-called “tick test,” which means short sellers will no longer be restricted from selling shares they don’t own just because the price is falling. The test, introduced in 1938 and applied only to listed securities other than those listed on the Nasdaq, after it was believed that short selling would have a negative impact in a declining market. Three years ago, the SEC embarked on a one-year pilot program to suspend the test, and has concluded that the general consensus was that that SEC “should remove price test restrictions because they modestly reduce liquidity and do not appear necessary to prevent manipulation.” Furthermore, says the commission, “the empirical evidence did not provide strong support for extending a price test to either small or thinly traded securities not currently subject to a price test.” The SEC also voted to adopt final amendments to Rules 200 and 2003 of Regulation SHO, aimed at reducing naked short selling, that would eliminate grandfather provisions regarding fail-to-deliver positions. The commission also has reproposed amendments aimed at further reducing fails to deliver in certain equity securities by eliminating the options market maker exception to the close-out requirement of Regulation SHO. The new rules will go into effect 60 days after publication in the Federal Register.
  2. B1010


    Does anybody know when the Federal Register is being published???
  3. Federal Register is a daily publication used for public notices by the federal government.

    Usually takes a day or so for the notices to come out in the Federal register. If they submitted it yesterday then Today or Monday should have the notice if FR did not require any edits for form.
  4. B1010


  5. B1010


    Hope not but I wouldn't be surprised.

  6. Historic, anyway you slice it. The question is, what does it mean?

    Does "it" eliminate a specialist edge? Don't think so. ETF's already require no uptick. Roughly 70% of NYSE volume is program trading in one form or another.

    "It" should invoke more order flow. More predictiable identified prey in the form of amateur short sellers. Once in, in aggregate, what's an ax to do????

    More sustained moves OR more volatility (the trader's friend)?

    How 'bout REAL comments rather than this "finally" bullshit as if an uptick was a major impediment his/her operations?
  7. B1010


    I wouldn't say major "impediment." It will just make short side fills a little easier on the NYSE with my quicker type of scalp trades on a falling stock which I do some of. But the longer term trades obviously won't be much different.
  8. You can still be left out with the "no shorts available" clause.:p

    Many firms claim to have lots of stock to borrow but when the borrowing gets going, it turns out they only have 100 shares of this and 200 shares of that. We need to see a good whack in the market with this regulation in place to make a better judgement.
  9. B1010


    Very true
    #10     Jun 15, 2007