Short Sale Tick Test Rule (Uptick Rule) Ends Thursday, July 5, 2007

In case you missed the link I posted mid-June, you’ll no longer have to wait for an uptick in order to short a stock. (Not that anybody would be shorting in this market!) Here’s a note my broker just sent out:

The SEC has voted to remove the “short sale tick test”, Rule 17 CFR 240.10a-1 for all equity securities. Effective Friday, July 6, traders will be able to short all securities on an up, down, or zero tick.

The following resource links provide more information on Rule 17 CFR 240.10a-1 and the SEC’s proposal to remove the rule.

Speech by SEC Chairman: Opening Statement on Eliminating the Short Sale ‘Tick Test’

SEC Votes on Regulation SHO Amendments and Proposals; Also Votes to Eliminate “Tick” Test

Short sellers of the world rejoice. Now if they would just get rid of that pesky you-have-to-locate-and-borrow-before-you-can-short rule… 😉

Comments

  1. Posted by Dan on July 4, 2007 at 5:34 am

    Happy Fourth Mike,
    Unrelated to the rule change, I have a question. Are you still day trading as opposed to swing trading? Are you still using Maoxian type set-ups?
    Also your opinion on the following would be appreciated.
    1)Intraday trade 3 shorts and 3 longs based on gaps or news. Market conditions are not considered.
    2)All trades entered after 10:00am
    3)All stops set at 2%
    4)All positions closed by 3:50pm
    I did some back testing,about eighty days and the data looks promising. I was surprised how many shorts were profitable on big up days in the market.
    I’m now only into a few days of paper trading and the results look pretty good.
    Thank you,
    Dan

  2. Posted by Born2Code on July 4, 2007 at 3:10 pm

    “(Not that anybody would be shorting in this market!)”… I am shorting in this market 🙂 though my trades are off weekly charts and i’ve had some of my shorts for months (e.g. AEO)… and over 85% of my positions are long.
    Happy 4th.

    I have a question, been thinking about this for the last few days. Can a shorted security be borrowed from the buyer’s account and be shorted again?
    Say Sam, Mike and Jon all have accounts at the same brokerage. Sam owns 1 share of APPL. Mike shorts that share. Jon buys Mike’s shorted share which was originally borrowed from Sam’s account.
    Can Mike then short another share borrowed from Jon’s account? the share having been acquired through purchasing a shorted share!
    how many times can a single share be shorted as it shows up in buyer’s margin accounts?

  3. Posted by jmjatlanta on July 6, 2007 at 2:11 pm

    Who says you have to find a place to borrow?

    :((Patrick Byrne:(( says you don’t have to.

Trackbacks

  1. […] took a trade in PMTC yesterday, just to celebrate the uptick rule elimination (well, that wasn’t really the reason).  Some of you might notice that this […]