As Traders Magazine was going to press, the Securities and Exchange Commission had received approximately 4,100 comments regarding its amendments to Regulation SHO, but apparently that was not enough.
In August, the regulator added a sixth proposal to its list of short sale price tests, giving the public another 30 days to weigh in on the need for restrictions on short sales.
The industry response to the SEC’s first five proposals was overwhelmingly negative. Perhaps as a result, the SEC’s latest proposal was one recommended by four of the nation’s stock exchanges back in February.
Then, Nasdaq OMX, NYSE Euronext, BATS Trading and the National Stock Exchange recommended the SEC adopt a rule which required traders who wanted to short to do so at one increment above the best bid. That would have the effect of requiring traders to post an offer if they wanted to short a stock. They could not hit the bid.
The SEC and supporters of the plan maintain it would be easier for the industry to implement and comply with. Detractors argue it would make it more difficult to get a short off.
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