May 6, 2009
I strongly feel that an uptick rule is not needed in that such a rule distorts the market's pricing mechanism. It can work to the advantage of market makers and hurt individual investors who trade the market. If an uptick rule is put in place then with the same reasoning,a down tick rule should also be put in place so as to avoid creating bubbles in stock prices. With penny pricing of stocks, it is easier to achieve an uptick than when the uptick rule was in place in earlier years. Please do not bring back wider spreads to advantage dealers and disadvantage the small investor.
If the SEC decides to limit short selling it would be better to do so with circuit breakers than an uptick rule. However, the rule would have to take into account news announcements that often move stock prices as much as 25%. Since such announcements are usually made outside of normal market hours, the sharp move in the stock price that results from a news announcement should not be considered in applying circuit breakers to subsequent trading.
There was no evidence that limiting short selling in financials in the fall of 2008 had any real effect on more efficient pricing of financial stocks.