The original uptick rule was created in 1938 and permitted short sales only after a stock price increase. The rule became obsolete and was repealed in 2007 due, in part, to the advent of decimalization and a study that concluded the rule had little impact on short sales.
Although a bill has been proposed that would essentially bring back the old uptick rule, the more likely outcome is implementation of a modified rule as proposed by the Exchanges. The Exchange rule would require short sellers to post a quote at a price higher than the prevailing national bid. However, the proposal would also require a Circuit Breaker to trigger its provisions. That is, the requisite uptick bid would only apply after a stock price has dropped precipitously (about 10%).
