Short Sellers Up in Arms Over Uptick
Tue Sep 29 2009 10:37:17 AM EDT
Powered by Minyanville: Short Sellers Up in Arms Over Uptick
This week the Securities and Exchange Commission will hold a round table discussion on the issue of short selling. The main topic will be whether or not the "Uptick" rule should be reinstated.
According to a Wall Street Journal article, this has upset some of the largest Wall Street firms as a number of them filed letters last week with the SEC objecting the new short selling rules. Under the new "Uptick" rule, traders would only be able to sell a stock short after the price has ticked higher. Advocates of the rule think it would keep Hedge Funds from masterminding "bear raids" that many commentators blamed for the excessive selling during the financial crisis.
While the rule seems fair for most individual investors (and is strangely similar to the rule that was removed in 2007), the larger firms have complained that short sellers provide the needed liquidity for efficient markets.