4.15.2009 The SEC will hold a roundtable at its headquarters on May 5, 2009 to further discuss whether short sale price test restrictions or short sale circuit breakers should be adopted. The roundtable will start at 10 a.m. EST. Roundtable participants will include leaders from self-regulatory organizations, trading venues, the financial services industry, investment firms, and the academic community.

On April 8, 2009, the SEC proposed two approaches to restrictions on short selling. If adopted, the price test approach would apply on a permanent market-wide basis, and the circuit breaker approach would apply to a particular security during severe market declines in the price of that security. The two approaches are:  

Market Wide, Permanent Approach

Bid Test: A market-wide short sale price test based on the national best bid (a proposed modified uptick rule). Price Test: A market-wide short sale price test based on the last sale price or tick (a proposed uptick rule).  

Security-Specific, Temporary Approach  

Circuit Breaker: A circuit breaker that would either:  

  • Ban short selling in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker halt rule).  
  • Impose a short sale price test based on the national best bid in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker modified uptick rule).  
  • Impose a short sale price test based on the last sale price in a particular security for the remainder of the day if there is a severe decline in price in that security (a proposed circuit breaker uptick rule).  

Click http://www.sec.gov/news/press/2009/2009-88-prelim-agenda.htm to access the agenda for the roundtable.  

Click http://www.sec.gov/rules/proposed/2009/34-59748.pdf to access the proposed amendments.