SEC Opens Discussion on Short Sales

The Securities and Exchange Commission will hold a roundtable on May 5 to discuss whether short sale price test restrictions or short sale circuit breakers should be adopted.

The two approaches to restrictions on short selling proposed by the SEC are:

1. The price test approach. This would apply on a permanent market-wide basis.
2. The circuit breaker approach would apply to a particular security during severe market declines in the price of that security.

“Since the Commission eliminated short sale price tests two years ago, we have seen market conditions and events that differ sharply from those of previous years,” said Erik Sirri, Director of the SEC’s Division of Trading and Markets. “In that time, the Commission has received many requests to reinstate short sale price test restrictions. The proposals we have recommended today are part of an overall effort to seek comment and input from all market participants, analyze and if necessary modify our previous actions, and boost investor confidence.”

The roundtable will be held in the auditorium at the SEC’s headquarters at 100 F Street, N.E., in Washington, D.C. The roundtable will be open to the public with seating on a first-come, first-served basis. The roundtable also will be webcast on the SEC Web site.

Image Credit: nromagna, Flickr