CNBC is reporting that Barney Frank has said the uptick rule would be reinstated within a month.
Our feelings on this are well-known. We’re not sure the uptick rule is good for anything in a market where stocks trade in the kind of volumes we see in the current market. And there’s zero evidence that short-selling, rather than fundamental financial and economic problems, has done much harm to stock prices. If anything, it actually may protect short-sellers by forcing them to short the stocks at a slightly higher price, creating a larger potential gain on the downside.
But, we’re so tired of this debate, we’re more or less willing to give it up. Go ahead with your stupid uptick rule Barney. It may even be the perfect regulation: completely ineffective but symbolically important.
How about a downtick rule? After all, upward manias have done far more harm to investors than bear markets.