Short Sale Rule
An SEC regulation in effect from 1938 until 2007 forbidding short sales on a stock after a downward tick in its transaction price. In other words, if the price of a stock decreased in the trade immediately prior to a transaction, that transaction is not allowed to be a short sale. Short sales were only permitted after an uptick or a zero-plus tick. This rule was instituted to prevent panic selling in an era when lack of computerization made markets more easily to manipulate. With the increased digitalization of stock markets, this rule was no longer necessary.