What is the UPTIC rule?

Uptick rule is a rule that states that people cannot shorten sales during a decline. In other words, the value of the shares must rise when someone makes a short sale. This practice is designed to prevent a cascading effect in which short retailers "accumulate" to stocks to reduce the price for profit. Like many regulations in the financial industry, the aim of the UPTIC rule is to prevent unfair manipulation of the market that still facilitates open trade.

Short sales are a complicated process and it is easy to get into big trouble as a short retailer. When someone makes a short sale on stocks, they borrow shares from someone else and sell it to another person at a specified price. When the stock price drops, a short retailer buys shares at a lower price, returns it to the original owner and maintains the difference in price. If the value of the shares rises, the short seller is forced to pay extra to cover the sales, which is what the dokes practice is dangerous because it is easy with a short lossSale.

In a simple example of the way UPTick's rule, John decides to shorten the sale in ACME Corporation. However, short stock sales are not allowed until prices follow the increase in the increase, indicating that the stock price is rising. The Uptick rule gives John a disadvantage, because if it is sold briefly during the increase, it may be forced to pay the difference in price if the shares rise. However, he prevents him from taking advantage of the situation where ACME shares are experiencing a spiral of downward prices.

This rule was introduced in the United States in 1938 as a rule 10a-1, in response to the concerns that short sales practices could lead great depression. The rule remained largely unquestioned until 2005, when the Securities and Stock Exchange Commission (SEC) quietly raised the uptick rule at some selected events to determine the impact. In 2007 sec this ruleAnd it canceled, but by the end of 2008 people have already demanded the return of the Rules 10A-1.

One of the interesting things about the renewal of the Uptick Rule is that the study suggests that the rule actually had so many impacts on stock prices. Financial analysts have suggested that a short retailer would not be well served by accumulating into stocks and lowering the price and that the only companies that could suffer if there is no rule of growth are those that are already fighting. Economists and scientists discussed the value of the UPTIC rule sharply, and despite the questions regarding its value at the beginning of 2009, SEC announced the renewal plans to deal with the extremely volatile US economy.