Short Sale Rules Changing....

qazmax · Sep 26, 2003

New Short Sale Rules

The SEC may propose sweeping new short-sale rules âin the next few months.â The measures are designed to standardize short-sale rules across all stock markets. The new rules will reportedly eliminate the NYSEâs âtick testâ and implement a âbid-testâ wherein a seller must sell short above the most recent downtick bid. This method is currently in use for NASDAQ securities. Experts anticipate that the new rules will apply to all markets, including ArcaEx and Island, who have the least stringent short-sale rules in the industry. A pilot program is also expected that will eliminate short-sale restrictions altogether on liquid stocks. Borrowed stock used in short sales will also now need to be delivered within three days from the short sale. Currently, there are no borrowed stock delivery deadlines.

nitro · Sep 26, 2003

Thank gawd.

nitro

Quote from qazmax:

New Short Sale Rules

The SEC may propose sweeping new short-sale rules âin the next few months.â The measures are designed to standardize short-sale rules across all stock markets. The new rules will reportedly eliminate the NYSEâs âtick testâ and implement a âbid-testâ wherein a seller must sell short above the most recent downtick bid. This method is currently in use for NASDAQ securities. Experts anticipate that the new rules will apply to all markets, including ArcaEx and Island, who have the least stringent short-sale rules in the industry. A pilot program is also expected that will eliminate short-sale restrictions altogether on liquid stocks. Borrowed stock used in short sales will also now need to be delivered within three days from the short sale. Currently, there are no borrowed stock delivery deadlines.

DT-waw · Sep 26, 2003

Quote from qazmax:

Borrowed stock used in short sales will also now need to be delivered within three days from the short sale. Currently, there are no borrowed stock delivery deadlines.

Oh my god... is this America or Cuba?
This means more swing traders will switch to futures.

Reitberg · Sep 26, 2003

the guys at the SEC will never figure it out. They will consistently implement rules at the wrong time.

These guys at the SEC only try to implement change when their ass is on the line. It makes no sense to have the SEC in the political position that they are in. The law makers need a way to seperate the SEC from the politics and the wants of the general public, because the general public is always wrong.

Merc · Sep 26, 2003

Quote from qazmax:

New Short Sale Rules
Borrowed stock used in short sales will also now need to be delivered within three days from the short sale. Currently, there are no borrowed stock delivery deadlines.

What does it mean exactly?

white · Sep 26, 2003

The only way you can deliver a short sell is to cover your position, does this mean they will make you cover within three days?

C Robinson · Sep 26, 2003

Quote from Merc:

What does it mean exactly?

IMO it means that the stock that was borrowed by the seller must be delivered to the buyer within 3 days. that does not mean that the seller has to cover. not really a big deal......

Don Bright · Sep 26, 2003

Quote from C Robinson:

IMO it means that the stock that was borrowed by the seller must be delivered to the buyer within 3 days. that does not mean that the seller has to cover. not really a big deal......

It sounds that way to me as well. A major difference between having short stock "bought in" vs. borrowing for delivery (which must happen anyway).

The downside of the "uptick bid" rule is of course possible manipulation by having a small trader in cahoots with someone else to make an artificial uptick. (Did I really use the word "cahoots"? )..... Example: Last trade $49, then bid goes to $46, someone bids 46.10 and takes out a short seller $3.00 lower. We know of examples similar to this over the years.

Hope all is good with you Chet!

Don

(I have to figure out how to get the bigger font to say "click here for Bright Trading")....(click below).....

Everyone have a great weekend!

Merc · Sep 26, 2003

Quote from C Robinson:

IMO it means that the stock that was borrowed by the seller must be delivered to the buyer within 3 days. that does not mean that the seller has to cover. not really a big deal......

Ok,
In that case what exactly this means: '...stock that was borrowed by the seller must be delivered to the buyer within 3 days...'???

Am I missing something here?

North Pesos · Sep 26, 2003

Quote from Merc:

Borrowed stock used in short sales will also now need to be delivered within three days from the short sale. Currently, there are no borrowed stock delivery deadlines.

What does it mean exactly?

Not sure, but I think that mean only that the broker have to exhibit the short volume for the quantity in 3 days, because many brokers in the past have accepted short even if they didn't have enought stock in quantity ... I supposed that the SEC don't want virtual borrow in stock because too long delay ...