April 22, 2009
Ms. Schapiro -
I submit that short selling is an integral part of the markets' efficiency. While relatively recent modifications such as eliminating the uptick rule (which should be reinstated in its' original form) have added to the extreme volatility of the markets, banning short selling is not the answer. Such a move would be akin to banning the short sales on futures contracts.
The markets operated with a great deal less volatility when the up-tick rule was in place and reinstating the old rule will work fine. With all due respect, too often we over react by blaming too much one or two factors, when in reality, there were numerous reasons for volatility. (Like we take our shoes off to board a plane just because one idiot tried to hide a bomb in his shoe)
Curbs must be reasonable as well. The markets need to be able to move freely and fairly represent the value at any given time. Constraining the downward movement has the possibility of creating a bubble (not unlike the housing market) where values are inflated. While avoiding a one day "crash", the potential for a prolonged down movement is increased. (Do you pull the bandage off slowly or rip it off and get it over with?)
Thank you for the opportunity to voice my opinion. Good luck and thank you for your service to the public.
Dave Wagner