Used for listed equity securities. A special trading situation where a short sale is allowed on a minustick. The owners of a convertible trading at parity can sell the equivalent amount of common short on a minus tick, assuming they have the firm intention to convert.
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A short sale exempt from the short sale rule, which was a rule requiring that short sales occur only after upticks or zero plus-ticks. Convertible securities were sometimes short exempt. This is no longer important as the short sale rule is not in effect anymore.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A short sale exempt from the rule that short sales must occur on upticks. Short exempts include some arbitrage transactions. Owning a security that will be converted into the common stock that will be sold allows a short exempt sale.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.