The US Securities and Exchange Commission (SEC) is seeking public comment on whether it should impose price or so-called circuit-breaker restrictions on short-selling US equities.
The commission said it is re-evaluating the use of short-selling restrictions because of “extreme market conditions and the resulting deterioration of investor confidence”.
The SEC’s decision to consult on new short-selling rules follows calls from several market participants for increased controls on short-selling. In March, for example, the US’s three biggest exchange groups – NYSE Euronext, Nasdaq OMX and BATS Exchange – wrote to SEC chairman Mary Schapiro proposing that a revised version of the uptick rule that was repealed in 2007 be used in conjunction with a circuit breaker that would take effect if a particular stock’s value dropped sharply. Uptick rules only permit short sales when stock prices are stable or rising.
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