March 26, 2009
To add to my comments, I would greatly prefer that the rule be as close as possible to the one that worked so well for 69 years. Assertions that the old rule couldn't be implemented in an age of tremendous technical and computational sophistication seem disingenuous at best. I can't imagine a 10% circuit breaker would help much with stability - what short-seller or hedge fund would pass up the possibility of driving a stock down 10% in a single day The old rule worked so well for so many years that to consider watering it down in any way would be irresponsible. Perhaps adjusting the definition of an uptick to 5 cents or so would improve matters in an age of penny spreads.
Why is the rule necessary I would note two data points: an explosion in downside ticks immediately after the rule was revoked in July 2007, and a surge in 90% volume days to the highest levels in at least 60 years, both immediately following revovaction of the rule.
And there's always the matter of the "coincidence" that the worst bear market since 1937-1938 immediately followed the revocation of a rule that was implemented the year that bear market ended.
Thank you, and best wishes in your mission to protect investors.
Paul Shread
Columbia, Maryland
-----Original Message-----
March 2, 2009
I'm amazed that you folks have yet to make a connection between the elimination of the uptick rule and a 60-year+ increase in 90% volume days in the last 18 months.