What is the Uptick Rule?

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What is the Uptick Rule?

Submitted by Bill Belew on Wednesday, 25 February 2009No Comment

There is talk of resurrecting the uptick rule -

Bernanke Says There May Be Benefit to Resurrecting Uptick Rule.

What is it -

1. Investopedia defines it as – A sometimes rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. ”

The rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1.

The purpose of the rule is to prevent short sellers from adding to the downward momentum an asset is already experiencing sharp declines. The SEC eliminated the rule on July 6, 2007.

It is also known the “plus tick rule”.

There are calls to bring back the uptick rule. See -

Isakson Outlines Keys to Getting Economy Back on Track

&

SEC may Reinstate Uptick Rule – Forex Peace Army Forum

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What is the Uptick Rule? said:

[...] Random Feed wrote an interesting post today onHere’s a quick excerptThere is talk of resurrecting the uptick rule – Bernanke Says There May Be Benefit to Resurrecting Uptick Rule. What is it – 1. Investopedia defines it as – A sometimes rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. ” The rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1. The purpose of the rule is to prevent short sellers from adding to the downward mom [...]

- 25 February 2009 at 9:36 pm

What Are Penny Stocks? - Money & Investing - Banks.com said:

[...] What is the Uptick Rule? (panasianbiz.com) [...]

- 28 February 2009 at 6:23 pm

Cracked World said:

The effectiveness of the uptick is inconclusive, no one really knows if it would help matters at all but in a market that is strapped for confidence it may be a shot in the arm for the Dow.

http://crackedworld.com/2009/03/13/uptick-rule-may-crash-the-party-on-short-selling/

We are starting to see some gains and this may help sustain them I see no reason not to try.

- 13 March 2009 at 9:31 pm