SEC: Short-Selling Tick Test Is History
Jun-14-2007 | Source: Hedge Fund Daily
The Securities and Exchange Commission has unanimously voted to end the so-called “tick test,” which means short sellers will no longer be restricted from selling shares they don’t own just because the price is falling. The test, introduced in 1938 and applied only to listed securities other than those listed on the Nasdaq, after it was believed that short selling would have a negative impact in a declining market. Three years ago, the
SEC embarked on a one-year pilot program to suspend the test, and has concluded that the general consensus was that that
SEC “should remove price test restrictions because they modestly reduce liquidity and do not appear necessary to prevent manipulation.” Furthermore, says the commission, “the empirical evidence did not provide strong support for extending a price test to either small or thinly traded securities not currently subject to a price test.” The
SEC also voted to adopt final amendments to Rules 200 and 2003 of Regulation SHO, aimed at reducing naked short selling, that would eliminate grandfather provisions regarding fail-to-deliver positions. The commission also has reproposed amendments aimed at further reducing fails to deliver in certain equity securities by eliminating the options market maker exception to the close-out requirement of Regulation SHO. The new rules will go into effect 60 days after publication in the Federal Register.
http://institutionalinvestor.com/Art...icleID=1377545
Have a great weekend, all!
Janice