The Uptick Rule
The Uptick Rule is officially known by the SEC as rule 10a-1, it was first implemented in 1938 by the first SEC Commissioner as a way of stemming the downward spiral of stock prices. It served the market well from 1938 through July 6, 2007, when the SEC suspended the rule claiming that the trading patterns in the "modern" trading world did not warrant it. During the last few months, the absence of the Uptick Rule was very noticeable. The Uptick Rule allows a "short sale" of stock only if the preceding sale was an uptick. This prevents traders from forcing the price of a stock down. The SEC suspended the rule believing that with so many other instruments available to "short" a stock, such as options and ETFs the Uptick Rule would be ineffective. In the current Stock Market drop of over 50%, an Uptick Rule should have slowed down the downward spiral, especially in certain securities sold short without mercy. Many stocks that have had their share prices force...