Short Sale Rule 201

HedgeFundLIVE- Today in the midst of our trading LFT to the short side the stock decided to quickly rip a quick dollar and whenI looked for the news I noticed that at 1:40 the SEC had put the Short Sale Rule 201 in effect for LFT.  Now I can’t say for sure if this is what caused the rally but I can surely say I had no clue as to what is the Short Sale Rule 201.  I decided to take a minute, look it up, and learn something while I took the quick beating in LFT.  Upon researching the Short Sale Rule 201 I found a quick summery from the SEC which helped me gain a quick understanding and I’m sure it will help you as well.

Rule 201 includes the following features:

  • Short Sale-Related Circuit Breaker: The circuit breaker would be triggered for a security any day in which the price declines by 10 per cent or more from the prior day’s closing price.
  • Duration of Price Test Restriction: Once the circuit breaker has been triggered, the alternative uptick rule would apply to short sale orders in that security for the remainder of the day as well as the following day.

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