Four major exchanges advised the SEC on March 24 to adopt what they termed a "more prohibitive" version of the uptick rule.

In a letter to SEC Chairman Mary Schapiro, Nasdaq OMX, BATS, the National Stock Exchange, and NYSE Euronext recommended a modified uptick rule that would allow investors to initiate short sales only at a price above the highest prevailing national bid. The restriction, however, would only be triggered when a "circuit breaker" – namely, a precipitous stock price drop of "perhaps" 10 percent – is activated. The exchanges contended that the original uptick rule, which allowed investors to sell short only when a stock's price was at or above its preceding sale price, would have no effect in the modern markets, where prices change "multiple times in a single second."

The SEC abolished the original uptick rule in July 2007, and has scheduled an April 8 meeting to decide whether to reverse that decision. Schapiro has already announced that it is likely to reinstate the rule.

EXCHANGE LETTER: available here (PDF)

RELATED STORY: SEC Head Says 'Uptick Rule' May Be Reinstated, Yahoo! Finance (Mar. 11, 2009)