Short Selling Tick Test-- Bye Bye!

[thetradingdoctor]

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

[Soultrader]

Very interesting. Thank you Janice for the info!

[torero]

That's good news for stocks traders, no change for us emini-ers hee hee.

[epiktetos]

Excellent! Fantastic News!

[thetradingdoctor]

More Bye Bye! Seems like lots of saying goodbye these past few days.

Anyway---- Bye Bye ER2 ( Russell 2000 minis)! Looks like they will stop trading sometime in mid-September and then who knows what will happen?


Reminds me of that beautiful song by Sara Brightman and Andreas Boccelli:

YouTube - TIME TO SAY GOODBYE

Bye Bye For Now ;-)

Janice

[cooter]

Look for the Merc to make a push for their mini S&P MidCap400 contract (same tick/point value as the current Russell 2000 mini). Keep in mind that the real money is in the large RL pit-traded Russell 2000 contract, so this is the contract that the "big boys" will be really concerned about.

Also, you'll be able to trade the mini-Russell on the ICE platform from the NYBOT - although most brokers probably aren't setup for trading on it yet electronically. This is another reason to give FCMs a reason to use the ICE to trade electronically.

[The Bear]

	Quote:	Soultrader
	Very interesting. Thank you Janice for the info!

Anyone know the date that the uptick rule is actually being removed?

[nickm001]

The SEC has approved amendments rule 10a-1 to remove the "short sale tick test" requirement effective Friday, July 6th, 2007.

Effective Friday, July 6, traders will be able to short all securities without a required up tick, up bid, or short exempt designation.


Please refer to the following for additional information:

www.sec.gov/rules/final/2007/34-55970.pdf

http://www.sec.gov/news/speech/2006/...406ccc-10a.htm
www.sec.gov/news/press/2007/2007-114.htm

[cooter]

Nickm,
Thanks for providing the definitive word on this.

Hopefully this topic and source material can be made into a sticky, or added to the forthcoming wiki.

[JustMega]

Cui bono??????