May 4, 2009
Reinstatement of the Up-tick Rule is a must do. The correlation is undeniable. Shorterly after the up-tick rule was removed in 2007 the market plummeted and when reinstatement of the rule was announced in 2009 the market began recovering. Rather than the market test in 2005 during a roaring bull market why don't you look at the actual data. The decision should be obvious.
Additionally, the market has an upward bias since up-tick rule was implemented after the depression because of the stock market crash. Given this fact Im unsure of what the "equal footing" argument means. Does it mean the upward bias that has been in place since the depression, should be eliminated. If that was your objective then it was achieved with catastrophic results to anyone with funds invested in the market when the up-tick rule was eliminated in 2007. Perhaps the goal is to encourage investors from investing in the market, then again you achieved your goal back in 2007.
What is your goal in 2009? Is it to create "equal footing" at the expense of the historical upward bias? Is it to encourage Americans NOT to invest? I think the evidence is clear and reinstatement is a must.
Even if you would argue that reinstatement will not have any affect or that the evidence is not conclusive. Wouldn't it be more prudent to ensure that the upward bias remains in place and investor confidence in the market is restored, particularly given the current market situation? Simply put, there is no rational reason not to reinstate the rule and there are multiple good arguments for reinstatement. I simply hope SEC under Ms Schapiro makes a prudent, sensible decision on this issue it will certainly reflect on the Obama Administration.