Uptick Rule Repealed

Just a reminder to all you short sellers.... Beginning today (Friday, July 6th)traders will NOW be able to short all securities on an up, down, or zero tick. This marks the end of that dreaded "uptick rule" whereby shorters could only short a position on an uptick. This meant that if a stock traded at $50 and you wanted to short it, then you would have to at $50.01 if it ticked higher or wait for it to trade under $50 at $49.99 for instance and then back to $50.

Of course, you still have to find shares available for shorting! So, in reality, it's possible this might make it a bit more difficult to short since it will remove some of the inhibitions many traders have about shorting in the first place... I guess we will just have to wait to see about that one...

For more info on eliminating the "Tick Test" which once required an uptick for shorting, go to http://www.sec.gov/news/press/2007/2007-114.htm

As a bit of background, the "tick test" rule, as it's called, was implemented in the 1930s following the market crash as a means of preventing market participants from singling out a particular security and driving down its price. At the time the market was not very transparent and not as efficient. The thought is that now, in addition to stronger regulation, average investors would not support such an attempt and that this concern is no longer valid.