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SEC Seeks Comments on New Short-Selling Price Test

As we reported in April in our post, "SEC Proposes Short-Selling Restrictions," the Commission proposed amendments to Regulation SHO to restrict short sales. In that rule proposal, the Commission sought comment on two alternative short sale price tests, one based on the national best bid and the second based on the last sale price:

 

    • Proposed Modified Uptick Rule: A market-wide short sale price test based on the national best bid (a proposed modified uptick rule).

 

    • Proposed Uptick Rule: A market-wide short sale price test based on the last sale price or tick (a proposed uptick rule).

 


Yesterday, the SEC announced that it would seek "public comment on an alternative approach to short selling price test restrictions that may be more effective and easier to implement than previously proposed price test restrictions currently under consideration." According to the SEC, this alternative approach, the "alternative uptick rule," unlike the proposals in April, "would not require monitoring of the sequence of bids (that is, whether the current national best bid is above or below the previous national best bid), and as a result the alternative uptick rule would be easier to monitor. It also may be possible to implement this approach more quickly and with less cost than the prior proposals." The comment period on the original April proposal closed June 19, and the comment period for the new release will close thirty days from the publication in the Federal Register of the "alternative uptick rule" release. In other words, the period will likely close in late September.

The full details of the alternative uptick rule are available in a new release: http://www.sec.gov/rules/proposed/2009/34-60509.pdf

The original proposals are available at: http://www.sec.gov/rules/proposed/2009/34-59748.pdf

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