NEWS

In the Financial Times’s Lex column August 18, 2009, the author outlines the negative impact of a proposed rule by the U.S. Securities and Exchange Commission to impose an uptick rule to determine if an investor could go short.
“In a fevered atmosphere abusive trading becomes more likely so it makes sense to slam on the brakes. But as a permanent fixture this [new uptick] rule would be an unhelpful drag. Where other forms of the uptick rule present merely a speed bump to would-be short sellers, the latest proposal is more restrictive. Most probably, exceptions would be required for pure arbitrageurs and market makers, but others who help to keep prices in line would inevitably suffer. Meanwhile, it does little to deter directional short sellers – the real bête noire of chief executives – who are happy to take a position and sit in it for months, if not years. The obsession with short selling is obstructing what should be a comprehensive look at excessive short-run volatility. That, however, is not easily encapsulated in a two-word sound-bite.”