Short Sale Rule

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.
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References in periodicals archive ?
This postscript discusses the SEC's final short sale rule, approved by a vote of 3-2 on February 24, 2010.
Review of the policy debate over short sale regulation during the market crisis
The 2003 SEC short sale rule proposal was broad and instructive.
The 'phantom shares' menace: naked short selling distorts shareholder control
William Uchimoto, Ashton General Counsel, remarked, "our system has received an exemption from the short sale rule to facilitate liquidity commitments of TSE participating organizations.
Ashton Technology Reports Toronto Stock Exchange Receives Regulatory Approval for Canadian eVWAP
The issue of the Short Sale Rule, its impact and practicability, has been a hot topic in the late 1980s and into the 1990s.
Regional Investment Bankers Association Works With NASD To Establish Agenda for OTC Bulletin Board Roundtable Session
The process of complying with the short sale rule has been fully automated for NASDAQ securities.
SEC Grants Permanent Approval of NASDAQ's Primex Auction System(R)
short sale rule violations, including exercising short sale
NASD Regulation Announces Eight Day-Trading Enforcement Actions
The NASD's Short Sale Rule prohibits broker/dealers from placing short sale transactions in Nasdaq National Market stocks at the bid price or below the bid price, when it is below the preceding inside bid.
NASD Regulation Censures and Fines Lehman Brothers $100,000 for Short Sale, Confirmation Disclosure, and Free-Riding Violations
Tudor's trading desk personnel received conflicting advice regarding the applicability of the short sale rule to these sales from multiple sources.
Tudor Investment Settles SEC Proceedings
NASD), has approved the adoption of a short sale rule for Nasdaq National Market System (Nasdaq/NMS) securities.
NASD BOARD OF GOVERNORS ADOPTS SHORT SALE RULE FOR NASDAQ/NMS SECURITIES
These proprietary trading firms are estimated to account for 8% of trading activity in 2010 with future growth dependent on regulatory decisions covering fee caps, flash orders and short sale rules from the SEC.
US Options Markets Suffer as Exchanges Battle for Order Flow
Short Sales Get Boost From New Obama Short Sale Rules
Attorney Richard D. Vetstein's The Massachusetts Real Estate Law Blog Cracks Top 100 List
Enforcement of Short Sale rules and Affirmative Determination Rule.
Weeden & Co. Deploys FlexOMS

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