Approach 1: Market-Wide and Permanent (“short sale price test” or “short sale price test restriction”). Proposes two alternative short sale price tests: one based on the national best bid and the second based on the last sale price:
- Proposed Modified Uptick Rule: A market-wide short sale price test based on the national best bid (a proposed modified uptick rule).
- Proposed Uptick Rule: A market-wide short sale price test based on the last sale price or tick (a proposed uptick rule).
Approach 2: Security-Specific and Temporary (“circuit breaker”) Proposes "two basic alternatives: one alternative is a circuit breaker rule that would temporarily prohibit short selling in a particular security when there is a severe decline in the price of that security (a 'halt'), which could operate in place of, or in addition to, a short sale price test rule; and the second alternative is a circuit breaker rule that would trigger a short sale price test rule." Proposes that "such a short sale price test either be based on the national best bid for any security for which there has been a severe price decline or be based on the last sale price for any security for which there has been a severe price decline:"
A "circuit breaker" that would trip one of the following responses:
- Ban short selling in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker halt rule).
- Impose a short sale price test based on the national best bid in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker modified uptick rule).
- Impose a short sale price test based on the last sale price in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker uptick rule).
The full text of the proposed amendments to Reg SHO is available at: http://www.sec.gov/rules/proposed/2009/34-59748.pdf
The text of Chairman Schapiro's March 8 statement on the proposals is available at: http://www.sec.gov/news/speech/2009/spch040809mls.htm
The text of Commissioner Kathleen Casey's March 8 statement on the proposals is available at: http://www.sec.gov/news/speech/2009/spch040809klc.htm
The text of Commissioner Troy Paredes' March 8 statement on the proposals is available at: http://www.sec.gov/news/speech/2009/spch040809tap.htm
The text of Commissioner Luis Aguilar's March 8 statement on the proposals is available at: http://www.sec.gov/news/speech/2009/spch040809laa.htm
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