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Uptick rule update

post #1 of 23
Thread Starter 
This would be a big advantage for playing high short interest stocks



SEC Votes 3-2 To Curb Short Selling After 10% Stock Drop

By Tiernan Ray

The Securities & Exchange Commission has voted 3-2, Dems versus Republicans, to pass the “modified uptick” rule on short selling, which I discussed on Friday, according to Dow Jones Newswires’s Fawn Johnson.

The rule that says that you can’t short a stock after it has fallen more than 10% in a day, sometimes referred to as the “circuit breaker” rule.

Or, as Johnson more aptly describes it,

Under the rule, a price test would be triggered for a security any day in which its price declines by 10% or more from the prior day’s closing price. For falling stocks, the rule will allow short selling only if the price of the security is above the current national best bid.
http://blogs.barrons.com/stockstowat...d=yahoobarrons
post #2 of 23
Interesting, so what happens if we do short something after it's down 10% for the day?
post #3 of 23
Quote:
Originally Posted by UWouldLose View Post
Interesting, so what happens if we do short something after it's down 10% for the day?
you wont be able to short after 10%. you will be able to cover a short you already have but thats it.
post #4 of 23
The shorting restrictions did nothing to help the bank stocks on the last crash, this rule will not help them this time around either.
post #5 of 23
Quote:
Originally Posted by StockJock-e View Post
The shorting restrictions did nothing to help the bank stocks on the last crash, this rule will not help them this time around either.
which means you implying that we are going to have another bank crash
post #6 of 23
I am a litltle unclear on this.If a stock goes down 10% today,can you short it tomorrow?
post #7 of 23
Quote:
Originally Posted by trade2getrich View Post
I am a litltle unclear on this.If a stock goes down 10% today,can you short it tomorrow?
from what i have heard yes. It only lasts one day
post #8 of 23
Quote:
Originally Posted by trade2getrich View Post
I am a litltle unclear on this.If a stock goes down 10% today,can you short it tomorrow?
Im not very clear on that issue either, also, if a stock drops -10% in the morning, but then rebounds to say -5% by 1pm, can it then be shorted normally? Or does the rule apply to the remainder of the day even if the stock has rebounded?
post #9 of 23
Im not sure how accurate this is back after a quick search its what I found. According to this it is for the entire day and next...?

http://blogs.wsj.com/marketbeat/2010...les-explained/

edit: more info...

"Under the new rule, once a "circuit breaker" has been triggered, short-selling in the affected stock will be permitted only if the price is above the current highest bid for the stock. That restriction would apply for the rest of the trading session and the next day's session. "
post #10 of 23
I just read that Matt and I understand that the restriction includes the next day also.
post #11 of 23
You shorters are screwed!

Just kidding. I think it's a good policy though.
post #12 of 23
Quote:
Originally Posted by trade2getrich View Post
I just read that Matt and I understand that the restriction includes the next day also.
yea both the articles I read say the next too, I must be wrong in thinking it was only the one day
post #13 of 23
well this might give us a new way to play stocks. on very well know and highly traded names when they get close to being down 10% for the day we may start to see a mad rush to get short. so around 7% down people may want to get short before they cant. as long as the stock has bad enough news it wont matter if people cant go short after 10%. it will still drop but maybe a little less fast.
post #14 of 23
hmm interesting, pretty debatable issue

i think the market needs to be regulated differently then the system wants to steer at, but why not make it harder for the common folk

they might as well kill nakeds and make the market move on what shares there are, it would move like it used to, but we would most likely never be filled... that "invisible position" I wish I could grind all the data like they can, at least get a hold of it... all realtime market data should be free... companies should beg to give it to us so we can give it liquidity (finally give paper a seller) because thats what its all about... buyers and sellers

post #15 of 23
Quote:
Originally Posted by i_am_so_siri View Post
well this might give us a new way to play stocks. on very well know and highly traded names when they get close to being down 10% for the day we may start to see a mad rush to get short. so around 7% down people may want to get short before they cant. as long as the stock has bad enough news it wont matter if people cant go short after 10%. it will still drop but maybe a little less fast.
Or buy knowing that no one else can short the rest of the day or tomorrow...
post #16 of 23
"A: That part of the rule says that the shorting curbs come in when a stock’s price falls 10% from the previous day’s close.

Q: For how long?

A: For the entire day in which the shares fell below 10 percent and for the following day."

I fail to see how this helps anything. And what is this going to do to the options market?
post #17 of 23
to me it sounds like some firms are starting to cry because they are losing on heavy liquidity who isnt!

the problem is that this market doesnt know where to be and all the top econimist dont know jack either so, how can we get the equity market stable...
post #18 of 23
Quote:
Originally Posted by mattman27 View Post
Or buy knowing that no one else can short the rest of the day or tomorrow...
yeah i thought about that but thats where the making sure its bad enough news comes in. if the news is right the stock is gonna drop shorts or not. take china for instance. through the market crash they dropped harder and at the time there was no shorting for them. the speed of the drop should slow at 10% from now on i would say.
post #19 of 23
Quote:
Originally Posted by mattman27 View Post
Or buy knowing that no one else can short the rest of the day or tomorrow...
Yeah,and the next day,all the shorters jump on it again at a higher price.Will this not create more volatility in the stock?
post #20 of 23
Here's the press release from the sec website. http://www.sec.gov/news/press/2010/2010-26.htm
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