8.17.2009 The SEC has announced that it is seeking public comment on an alternative approach to short-selling price test restrictions. Specifically, it has re-opened the comment period and supplemental request for comment for proposed amendments to Regulation SHO. The alternative uptick rule would allow short selling only at an increment above the national best bid.
In April 2009, the SEC proposed two approaches to restricting short selling. One approach would apply on a market-wide and permanent basis and would implement short-sale restrictions based on either the last sale price or the national best bid. The other approach, considered a “circuit breaker,” would apply only to a particular security during severe declines in the price of that security. Once triggered, the circuit breaker would impose a short-sale halt or short-sale restriction based on either the last sale price or the national best bid.
Unlike proposals in April, the alternative uptick rule would not require monitoring of the sequence of bids (that is, whether the current national best bid is above or below the previous national best bid), and as a result the alternative uptick rule would be easier to monitor. It also may be possible to implement this approach more quickly and with less cost than the prior proposals.
Click http://www.sec.gov/rules/proposed/2009/34-60509.pdf to access the release.