An 'Alternative Uptick Rule' From the SEC

http://www.futureofcapitalism.com/2009/08/an-alternative-uptick-rule-from-the-sec

Back in April, the Securities and Exchange Commission proposed two approaches to restricting short-selling. Today, with the stock market sliding, the commission invited public comment on yet a third proposal. An SEC statement explains:

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.

Fair enough. But given that the uptick rule has been a topic of discussion since last fall, you'd think the SEC would decide what to do about the issue. Instead, it's hemming and hawing and asking for public comments on a third proposal other than the two it initially considered. It just adds to the sense that economic policy is made on an ad hoc, improvisational basis, rather than with a predictable set of rules. Some conservative critics of President Obama's proposals for financial markets regulation are prone to ask what is the rush, and to say that it's better to take some extra time and do it right. That's one line of reasoning, but there is also an argument in favor of making clear to market participants what the rules are going to be, and making it clear that every day the market is down a couple of percentage points the government isn't going to rush out with some new proposal to change the rules until the next time the market sags, at which point, yet another new proposal will be rushed out.

by Editor  |  Aug 17, 2009 at 3:58 pm Related Topics:  Capital Markets Regulation, SEC receive the latest by email: subscribe to the free futureofcapitalism.com mailing list