The Securities and Exchange Commission’s (SEC) plan for an alternative uptick rule has been welcomed as a measured, political response. But more guidance is needed on implementation.
The rule will ban short-selling on individual stocks if their price has dropped 10% in a trading session. At that point a circuit breaker is triggered and short-selling is only allowed if the sale is higher than the best bid price available.
“It is a rational response and considering the political pressure, the SEC has taken a measured and balanced approach to the problem,” said David Kaufman, partner at Morrison & Foerster in New York.
However, there is a raft of issues that needs clarification so that companies, banks and...