The SEC released five different proposals for reinstating the uptick rule. A rule that was in place for 70 years and worked was removed in 2007. The rule allowed short sales only if a preceding sale in a stock was followed by an uptick, this refrained short sellers from overwhelming a particular stock.
The SEC proposals:
* SEC staff recommends updated uptick rule proposal which would apply to all stocks
* SEC staff recommends bid test, where shorting would only be allowed on ‘up-bid’
* SEC staff recommends 3 circuit breakers to curb short selling
* One circuit breaker would temporarily ban short selling of stock for rest of day if stock fell by 10 percent
* Another circuit breaker would trigger the updated uptick rule proposal for the rest of the day for the stock
* Third circuit breaker proposal would trigger the bid test for the rest of the day for the stock
This along with the updated mark-to-market rules should slowly begin to bring back some credibility to this market.