Pressure rises to bring back uptick rule Legislation introduced to make short selling more difficult again By Alistair Barr, MarketWatch Last update: 2:49 p.m. EDT July 16, 2008 SAN FRANCISCO (MarketWatch) - Pressure is rising to bring back a rule that would make betting against the stock market more difficult in the wake of a damaging swoon in equity prices over the past month. Rep. Gary Ackerman, D-NY, a member of the House Financial Services Committee, introduced legislation on Wednesday that would reinstate the so-called uptick rule. In a typical short sale, traders sell borrowed shares, hoping to buy them back at a lower price and return them to the lender. The difference is kept as profit. The uptick rule used to require that traders wait until stocks rise before adding to short positions. It was introduced in 1938 in the wake of the stock market plunge that accompanied the Great Depression. The Securities and Exchange Commission rescinded the rule in July 2007. That coincided with the start of the mortgage-fueled credit crunch. The Dow Jones Industrial Average has slumped 17% since the beginning of last July. That's sparked debate about whether dropping the uptick rule has triggered more aggressive shorting. Ackerman said on Wednesday that his bill mandates that the SEC reinstate the uptick rule within 90 days of the legislation's passage. "In the wake of the elimination of the uptick rule, many volatile stocks that the regulation was designed to protect are being driven down as a result of manipulative short sale practices," said Ackerman in a statement. "Reinstatement of the uptick rule would help curb these abuses and ensure greater stability and confidence in the market."