Uptick rule may return, Rep. Barney Frank says....

If the data proves that the losses are partly due to the absence of the uptick rule, let's go ahead and get rid of the other bit of regulation that corresponds to all this:

Reg NMS

Look at the data, Reg NMS phased in completion on Oct 8, 2007, the peak close was Oct 9, 2007. The phase in began in July which was the previous peak.

We need speed and efficiency in the markets and not all this protection for idiots that don't know what they're doing. This is an example of government regulation that clearly isn't working.
 
Quote from monstimal:

If the data proves that the losses are partly due to the absence of the uptick rule, let's go ahead and get rid of the other bit of regulation that corresponds to all this:

Reg NMS

Look at the data, Reg NMS phased in completion on Oct 8, 2007, the peak close was Oct 9, 2007. The phase in began in July which was the previous peak.

We need speed and efficiency in the markets and not all this protection for idiots that don't know what they're doing. This is an example of government regulation that clearly isn't working.
More...
The period when there was reg nms and an uptick rule was annoying. If I sent a NYSE sell to tick my short, and the best bid was on arca, it would be re-routed so the short wouldn't step. Before NMS the short would just step right through the arca bid and go +.01 from whatever the last NYSE print was. Afterwards clearing out the ecns manually was such a pain and added risk. Sitting there praying that someone would post 100 shares on nyse at the best bid so I could tick the short was never much fun.
 
1. Leverage

2. Coincidence


These uptick discussions almost always omit the impact that the margin restrictions of Regulation T, which accompanied the Securities Exchange Act of 1934. This gave the Fed the power to set margin rates.

Since then, overnight margin leverage for retail investors / traders has been no higher than (2.5 to 1) and as low as (1 to 1). It currently stands at (2 to 1).

Prior to that the Fed had no role in margin rates. Before Reg T margin restrictions it was not uncommon for
stocks to be purchased with 10 percent margin, in other words (10 to 1) leverage.

Cutting leverage by a factor of at least 4 may have had more to do with establishing the 1938 - 1942 support floor than the uptick rule.

-----


Regarding coincidence - the news discussing subprime losses started to circulate around this time. As can be seen in the article below, by Nov. 2007 the issue of subprime losses is described as "spreading."

----------------


Subprime losses hit Morgan Stanley, AIG
**November 8th, 2007**, 7:02 am - posted by Mathew Padilla, Reporter

Here’s the latest on the spreading subprime losses from the Wall Street Journal today…

American International Group Inc. said it saw a 27% drop in net income and a $2.68 billion after-tax write-down of assets in the third quarter. And Wall Street firm Morgan Stanley, which recently became a lead player in underwriting subprime-mortgage securities, said it has taken a $3.7 billion hit, or $2.5 billion after tax, from its subprime exposures in the first two months of the fourth quarter.

Concerns about subprime exposure have battered the stocks of financial companies, pulling down the broader market. Both AIG and Morgan Stanley reported the results after markets closed yesterday. Morgan Stanley’s announcement came after its stock price fell by 24% in the past five trading days and ***two analysts on Tuesday predicted the firm faced possible fourth-quarter write-downs of $3 billion to $6 billion.***

The two announcements showed that the pain from this summer’s credit crunch is widening out from the first small group of companies to be hit hardest — Merrill Lynch & Co., Citigroup Inc., and UBS AG — to include more and in some cases unexpected market participants.

While much of AIG’s business is providing insurance services to American companies, it also insured some market players against mortgage-related risks. And while Morgan Stanley raised its subprime profile with an acquisition last year, officials said the bulk of its losses came from wrong-way proprietary trading strategies, or bets with the firm’s own money.

--------


This definitely had more of an impact than the removal of the uptick rule.

The growing realization by the market re: the magnitude of institutional leverage with this stuff definitely had more of an impact than the removal of the uptick rule.
 
Quote from NY0BScalper:

The period when there was reg nms and an uptick rule was annoying. If I sent a NYSE sell to tick my short, and the best bid was on arca, it would be re-routed so the short wouldn't step. Before NMS the short would just step right through the arca bid and go +.01 from whatever the last NYSE print was. Afterwards clearing out the ecns manually was such a pain and added risk. Sitting there praying that someone would post 100 shares on nyse at the best bid so I could tick the short was never much fun.
More...

You sir, are an idiot
 
Its funny how these morons have already forget about the tech bubble where so many stocks went from near $1000 or so to pennies in no time. The uptick rule was in place then. I know nasdaq didn't have the exact same uptick rule as the NYSE (it had zero plus tick I believe) but you couldn't slam bids either. It made no difference what so ever. Just like recently when the SEC completely BANNED shorting all financials for a short period and then the financials had one of the biggest down days in recent history. This is just going to greatly decrease liquidity for the longs when they want to sell their positions in a stock getting crushed. When people see the 200K offer stepping down all the bids are going to completely dissappear like the good old days. Anyone thats ever daytraded for a living knows what i'm talking about. This is just comedic to watch these douchebags put any blame on the uptick for what has happened to our financial markets. Wake up people!!! Firms will have ways around it anyway like they always have. And people will forget all about this nonsense when the markets take their natural course and recover.
 
You must log in or register to reply here.
Back
Top