But finding curbs on short selling that actually make any sense has been difficult.
Today, the SEC is trying to finish the deal, requesting comment on one of the more practical previous proposals — the so-called “tick-test.”
New York Times: The proposal would require that short sales be made only at a price higher than the current best price being offered by would-be buyers of the stock. It is similar to the so-called tick-test, which was effective on many stock markets before 2007, but would be more restrictive and could be easier to apply given the current structure of markets. There is now no limit on short-selling, so long as the seller can locate shares to borrow.
As the Times notes, Wall Street argues there’s no evidence short-selling caused the plunge last year, and the academic studies out there agree with that. But politicians and the public love to hate shorts, so there’s pressure on the SEC to act. The question is: can they do something without actually doing anything?
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