It's no surprise to anyone but the SEC that market volatility exploded after the uptick rule ceased.
This will not likely put an end to calls to bring back the uptick rule, Casey added.
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That plus market-to-market accounting, no short uptick rule, and no ban on naked short-selling, led to the avalanche.
The uptick rule was lifted in the summer of 2007, right before the outbreak of the great financial crisis.
It requires the Securities Exchange Commission (SEC) to revise several rules, including reinstating the uptick rule and tightening rules against naked short-selling.
But, as a result of lobbying by Wall Street, those curbs were watered down and mostly eliminated along with the uptick rule, etc.
The SEC has yet to reinstate the uptick rule, nor has it provided guidance on how it will enforce already existing laws against naked short-selling.
In the summer of 2007 the commission abolished the uptick rule, which held that a stock couldn't be shorted unless it had gone up in price.
Just as it was okay to repeal the Glass-Steagall Act, and the uptick rule, it will make sense to use the bank rescue fund money for some other purpose.
The uptick rule, which has been the focus of much discussion after it was repealed in 2007, banned short-selling unless the sale price was higher than the last different price.
The uptick rule, in place from the 1930s, forced traders who wanted to borrow stock to sell short to wait for an uptick in the price before putting on their trades.
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Many also want a return of the so-called uptick rule, in which a short sale could only be put on after a tick up in the price of the targeted stock.
Wall Street was then successful in having the uptick rule repealed in 2007, and the New York Stock Exchange confirmed in November, 2007 that it had scrapped the curbs on program-trading firms.
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The SEC has faced a heap of criticism for repealing the so-called uptick rule in the summer of 2007, a move that many say exacerbated the sharp sell-off in 2008, particularly in financial stocks.
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Throughout this crisis I don't recall that Cox--who got rid of the uptick rule on short-selling in 2007 and then sat idly by as gangs of naked short-sellers destroyed cash-flow-positive banks--has had a word to say.
The SEC should be criticized severely for doing away with the uptick rule on short-selling--no shorting of a stock unless it has moved up in price--and for its failure to enforce rules against naked short-selling--requiring a short seller to first borrow a stock before he shorts it.
The SEC's removal in 2007 of the uptick rule (which held that a stock couldn't be shorted unless it had gone up in price), as well as its failure to enforce the rule against naked short-selling (an investor is supposed to borrow the shares before he shorts them), increased pressure on beleaguered banks and insurance company equities.
The rule, known as the uptick, said traders could only place short-sales following a higher bid in a stock price.
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Last year it controversially removed the rule that short sales could only be made on an uptick in a stock.
That, and the absence of a rule requiring short sales to be done on a stock's uptick, gives plenty of ammunition to a trader intent on driving a stock into the ground.
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