May 10, 2010
Happy Birthday New SEC Rules 200 and 201
In late February, primarily in efforts to minimize abuse short selling, the SEC announced amendments to two Rules included in its Regulation SHO. The changes implemented a "short sale-related circuit breaker" designed to stymie significant, intra-day price losses by halting trading/quoting of exchange-listed stocks experiencing a 10% decline from the prior day's closing price. Those new Rules go effective today (with an implementation date set for later this year).
The measures were adopted as moderate responses to cries for a re-implementation of the "uptick rule" (prohibiting successive short sales on the exchanges) that had been in effect between 1938 and 2007. While the utility of the 2010 amendments will take some time to gauge, their emphasis on circuit breakers as cubs on stock exchange volatility (albeit of the individual issue variety) could not be more timely in light of last week's 900-point intra-day drop in the Dow. For a summary of the SEC's changes materializing this morning, see http://www.sec.gov/news/press/2010/2010-26.htm.
May 10, 2010 | Permalink