Talk:Uptick rule

Restoration

I added some information on the adoption of a modified uptick rule in 2010. The section could use some fleshing out. Malvenuto (talk) 20:16, 4 October 2012 (UTC)

Elimination

"The elimination of the rule preceded an SEC order, placed on July 28, 2004, to create a one-year pilot temporarily suspending the uptick rule on select securities." : Shouldn't this be proceeded since 2007 comes after 2004? —Preceding unsigned comment added by 151.191.175.232 (talk) 16:44, 10 September 2008 (UTC)

Thanks --Wherewithal (talk) 06:02, 15 September 2008 (UTC)

Aftermath

Please, do not censor the aftermath section. The information was gathered with the help of the Google Stock Screener at July 12, 2008, one year after the elimination of the rule.

This page has some serious POV and original research issues. Using Google Stock Screener is tantamount to original research, additionally the citations are transient and will not yield the same results in a few months. Most importantly, we are in a bear market which renders your findings moot.--Wherewithal (talk) 13:16, 17 July 2008 (UTC)

The "aftermath" section is simply wrong, I am removing the conspiracy theory based on "google stock screener" as that is in no way evidence of anything--a proper study would control for historical effects, the person who did this plainly does not understand the first thing about research in the financial space. Second, a basic flaw in that theory is that the downturn has affected equities worldwide and yet only in the US was the uptick rule eliminated. Conventional finance theory would say that any effect based on the uptick rule would be short-lived, lasting probably no more than a few hours or at most a day or two, whereas the downturn in the market has been long and sustained. It's simply wrong and should be removed. The claims attributed to Jim Cramer are more reasonable, that it leads to increased volatility--but I do not see a proper citation for even that. Rjwells --(talk) 23:04, 25 July 2008 (UTC)

Any ideas or clues as to why this 70 year old rule is eliminated by SEC, and by whom, under whose authority, based on what study? Butter formula (talk) 15:47, 15 July 2008 (UTC

The SEC has did many studies prior to the removal of the uptick rule, including the initial repeal of the uptick rule for a limited number of securities to study the effects. The page as it stands now is filled with extreme bias. --Wherewithal (talk) 13:16, 17 July 2008 (UTC)

Somebody keeps deleting most of the page's content. Please, stop the censorship.

The entry is very opinionated to make the "Uptick Rule" seem like a good thing. Very biased, I am wondering who is responsible for posting this - I think there might be some special interest involved. —Preceding unsigned comment added by Shaunhazen (talk • contribs) 15:33, 21 July 2008 (UTC)

To the troll that keeps on deleting the information he/she doesn't want others to know: I suggest you to improve the article by extending it instead of deleting other people's contributions. If you think the elimination of the uptick rule did not have any effect on the markets write a section with whatever you have to say. —Preceding unsigned comment added by 69.104.91.213 (talk) 18:03, 28 July 2008 (UTC)

write a section with whatever you have to say: Wikipedia is not your personal soapbox, nor is it a collection of opinions. Further tampering/reverting will result in escalation to admins.Wherewithal (talk) 21:25, 28 July 2008 (UTC)

It seems that user Wherewithal is deleting other user's version because he dislikes it or disagrees. I think the analysis is opinionated but valuable. This article should be restored as the other user left it and then locked to prevent Wherewithal to delete it.

Constant removal op pro-uptick sections

I agree, Wherewithal is doing this. He has a history of "toeing the party line", relying on well-paid research by stock firms to bolster his opinions, while ignoring other evidence. There are other markets besides the U.S. that have the uptick rule, and you can compare them to see if it work to reduce volatility. There are many prominent analysts and economists that believe the uptick rule has a moderating effect on volatility.

. http://www.reuters.com/article/americasDealsNews/idUSTRE49089920081002
. http://www.tradersmagazine.com/news/102225-1.html

Banning short sales is considerably more heavy-handed, biased against (or for, depending on who you ask) stocks that aren't in the ban, and is completely non-reactive to daily changes and market pressures. The uptick rule satisfies investors need to have rules that attempt to reduce volatility without singling out specific stocks.

76.182.46.60 (talk) 20:45, 10 October 2008 (UTC)

Is this nonsense?

"The rule mandates that, subject to certain exceptions, a listed security may be sold short at a price above the price at which the immediately preceding sale was effected, or at the last sale price if it is higher than the last different price."

Edited out my own previous comment. I had some trouble understanding this.. I think the word either needed to be included and must rather than may is clearer, even though it is redundant after "mandated"

Typo in "Calls for reinstatement" section

"On the March 20, 2008 episode of Mad Money, Jim Cramer launched his campaign to reinstate the uptick rule. Citing the wild swings of the market since its elimination, Cramer said that the SEC eliminated the rule during a bull market, when liquidity was not a problem. Cramer believes that, without the uptick rule in place, short sellers are devaluing perfectly solid stocks.[7] On the Friday 22, 2008 episode, Jim Cramer further underscored the true scale of the absence of the uptick rule, exclaiming that Obama must "reinstate [the uptick rule], a rule put in place to prevent a repeat of the great crash.""

Obviously "the Friday 22, 2008 episode" isn't correct. Presumably it should be March 22, 2008, since the previously mentioned one is March 20, 2008. However, I have no proof that it was March 22, instead of some other month. How should a problem like this be dealt with? —Preceding unsigned comment added by Mattack (talk • contribs) 22:20, 17 December 2008 (UTC)

Looking through the edit history, the person who wrote that added it on Nov. 22, 2008, and it mentions Obama, who was a front-runner, but would likely not have definitively been named by Cramer prior to Nov. 4, 2008. Obviously, that's only circumstantial evidence, but seeing as there's no citation and nothing's been done about it in the three months since the above post (or in the four+ since the addition), I'm throwing that in. Feel free to modify it if more comes to light. Marcthepirate (talk) 04:49, 5 March 2009 (UTC)

Wow. Lots of garbage inserted in the final section today - 19 Sept 08, regarding crawford texas. While I agree, this doesn't belong in this entry. ===

♦ The paragraph related to ban on short sales of financial stocks on Sep 19 08 has nothing to do with the "uptick rule" and should be deleted or moved to the article on short selling, in my opinion. 68.210.216.173 (talk) 20:11, 19 September 2008 (UTC) CHC

Clarity needed on its actual effects

Is it likely that a 'short' order will be executed sometime later during the day, despite the rule? If so, there still seems to be lots of room for shorting. In other words, what percent of the day's 'short' orders actually get denied? Also, it would seem each short seller in a 'bear raid' is coming in at a lower and lower price, thereby increasing his risk in case of a price rise.Ykral (talk) 08:38, 29 December 2008 (UTC)

Can someone please sketch out an example of this rule (and without this rule) in light of 'concentrated short selling during the market break of 1937?' I think that it would be informative to have a simple numerical example of the thinking at the outset. My issue is that I don't see how the uptick rule does/does not disrupt a functioning market. Why does this matter, in a simplified sense? DRB1978 (talk) 23:59, 10 March 2009 (UTC)

This section is poorly formatted and biased

This section ("Calls for reinstatement") is just a laundry list of examples where people have advocated for reinstating this rule. The entire section should be re-written summarizing their arguments. [When I have time, I may do it myself.] There is too much information about the people themselves and where and when they made their arguments. Citations can be included for these details. The article is about the uptick rule, not the people debating it. Also, as Ykral notes, elaboration on the effects and effectiveness of the rule should be included.

It would be good to have something here about the role of decimalization in leading to the downfall of the uptick rule. There's a huge difference between a 1/8th of a dollar uptick and a 1/100th uptick! --Christofurio (talk) 15:58, 18 March 2009 (UTC)

I agree about the decimalization point. The decreasing of spreads made uptick salse closer to the ask. —Preceding unsigned comment added by 69.113.231.196 (talk) 02:33, 7 April 2009 (UTC)

Changes to the definition -- article needs work here

• "limits the timing of short sales." is inaccurate and confusing. The rule prohibits short sales under specific conditions distinct from timing.
• "and after considering the effects of short selling in downward moving markets." This tells the reader nothing.

The article is improved by removing these statements.

The section below ("Elimination") briefly describes why the uptick was originally created:

• [to] avoid the perpetration of a financial crime known as a bear raid.

The problem is -- this too -- is inaccurate. There needs to be a complete "Background" section created to describe in a little more depth how the rule came about in the first place. A bear raid is not necessarily illegal. patsw (talk) 03:14, 7 April 2009 (UTC)

I reworked the introduction. The definition now quotes from an SEC source directly so there can be no question of its accuracy. Consider the origin section to be a stub. I have some pre-2000 and even pre-1938 material to add. patsw (talk) 17:23, 8 April 2009 (UTC)

Points of view

I would like to reach an a priori understanding with the editors, both those with ids and those who choose to remain anonymous regarding the various points of view in the uptick rule:

• A point of view written into the article has to be attributed, verifiable, and needs to add to the substance of the article. It does not get to be stated as a fact.WP:NPV WP:NOR
• A non-authoritative opinion without some reasoning or evidence to back it up is not helpful. (i.e. attributed argument not attributed assertion)
• The morality or immorality of short selling cannot be stated as a fact.
• Cause and effect of the absence of an uptick rule and the Great Depression cannot be stated as a fact.
• Cause and effect of the suspension of the uptick rule and the drop in the DJIA from 14,000 to 6,500 since 2007 cannot be stated as a fact. patsw (talk) 20:35, 8 April 2009 (UTC)

Historic high levels of volatility

This entire section is original research and, in fact, doesn't even qualify as half-way decent research. One can scarcely attribute the high levels of volatility in recent markets to the elimination of the uptick rule. Has the writer perhaps not heard of the sub-prime crisis, the housing bubble, the credit squeeze and other market related events of the last one year? Attributing 'devastating loses trauma to an average 401k investor' is way beyond the fringe. The causes underlying volatility changes in the market are complex and it behooves us not to be simplistic in our approach to article writing. I am removing the entire section. --RegentsPark (My narrowboat) 15:21, 10 April 2009 (UTC)

If it were summarized, and cited as an opinion of someone whose opinion in the context of securities pricing is significant, and published in a reliable source, then it could be added here. This article is not a soapbox because the Wikipedia is not a soapbox patsw (talk) 18:40, 10 April 2009 (UTC)

I agree with these points. It seems someone is trying to make the case that the uptick rule did cause increased volatility but as the OP states, it could very well be due to the financial crisis. If there are some sources for reasonable arguments for this though it should be included in possibly a criticism section. Papile (talk) 21:35, 10 April 2009 (UTC)

I agree. There are some studies, though the general literature on the subject is inconclusive, that the uptick rule dampens volatility. Some of these are already included in the article in the last section. However, laying the blame for recent vol spikes on the removal of the uptick rule is hardly supported by the evidence out there. Even that volatility bubble graph, while accurate in what it shows, should be removed because it attempts to establish a causal link between the removal of the uptick rule and the movement of the Russell 3000. Again, a link that is WP:OR. I will remove the graph as well.--RegentsPark (My narrowboat) 21:46, 10 April 2009 (UTC)

I agree with what's been said above. It is not only original research, but it is unsourced and it is POV. I am removing. --JohnnyB256 (talk) 20:31, 13 April 2009 (UTC)

I also removed a HUGE chart showing the movement of the market after removal of the uptick rule. This is sheer OR, and has the effect of compromising the neutrality of the article. JohnnyB256 (talk) 20:39, 13 April 2009 (UTC)

"Pre-borrow rule" section

There's an entire section entitled "pre borrow rule" which is problematic for several reasons. It is completely unsourced, it has nothing to do with the uptick rule, and it makes questionable statements about real people and organizations. I have never heard of a proposal to drop all requirements to borrow, and as a matter of fact the pendulum is moving in the other direction. I am removing. JohnnyB256 (talk) 15:01, 12 April 2009 (UTC)

Wikiproject Finance intervention requested

I've asked for help from Wikiproject Finance, which supports this article. JohnnyB256 (talk) 20:48, 13 April 2009 (UTC)

Chart showing Russell 3000 movement and application of uptick rule

RegentsPark (Regents Park Capital Management LLC ?) has been biased in vandalizing the actual FACTUAL data, real chart that visually illustrates the market before the uptick rule elimination, during the pilot study, and after the uptick rule was eliminated.

Why don't you want people to see and make their own conclusions? The chart is real. —Preceding unsigned comment added by WiksterPolice (talk • contribs) 21:02, 13 April 2009 (UTC)

The chart may be real but the implied conclusion is WP:OR. --RegentsPark (My narrowboat) 21:13, 13 April 2009 (UTC)

Reliable Sources and Original Research

Please provide reliable sources for any broad statements in the article and please provide a reliable source that supports what a chart depicts. Wikipedia is not a place for original research (there are many peer-reviewed financial journals for that) but is a place for summarizing and presenting the results of peer-reviewed research of others. I will protect the article if original research or unsourced material is readded to the article. --RegentsPark (My narrowboat) 13:07, 14 April 2009 (UTC)

Protected

I have temporarily semi-protected the page. Please discuss the inclusion/exclusion of various disputed items below. --RegentsPark (My narrowboat) 15:08, 14 April 2009 (UTC)

Elimination of the uptick rule and volatility

(Copied over from my Regent's Park talk page. For comment.)

Reuters via USA Today raises issue of increased market volatility two weeks after the rule elimination in 2007, Rule change may be adding to volatility

Studies by Birinyi Associates (top and highly respected market research firm, often quoted by Bloomberg and WSJ) have traced the rise in volatility in U.S. stocks back to mid-July 2007, coinciding with the repeal of the uptick rule.

The Volatility Bubble -- Average Daily Change Now Above 4%

The Uptick Rule: Mr. Cox, Is It Really That Devilish?

(Bespoke Investment Group is affiliated with Birinyi Associates)

A number of highly experienced people have suggested the rule change is having a major impact on the stock market, many pros from the industry have raised similar concerns (to name a few):

1.“The rule changed eight weeks ago, and market volatility has increased substantially,” said Patrick Becker, president of Becker Capital Management Inc. of Portland, OR

2. “I don’t think anyone would disagree that removing the uptick rule is a benefit to short sellers — and they are mostly hedge funds,” said Peter Chepucavage, general counsel at Plexus Consulting Group LLC in Washington.

3. “The power of the short sellers — or you could call them hedge funds — has grown significantly in stature,” said Andy Brooks, head of equity trading at T. Rowe Price Group Inc. in Baltimore. “We’re in the thick of it, and I think [eliminating] the uptick rule is a major contributor to what’s happening in the stock market,” he added.

4. Karl Diether (same researcher that found uptick rule dampens volatility in his 2005 study), an assistant professor of finance at Ohio State University in Columbus, "the pilot tests (SEC Pilot Studies) were not done under a full range of market conditions that might have produced results similar to the current market volatility."

5. Etc. -- WiksterPolice (talk) 18:28, 14 April 2009 (UTC)

(outdent) All this sounds reasonable to me. Perhaps you would like to rewrite the Historical volatility section (titled perhaps 'The uptick rule and volatility') with the material you've listed above. As long as it is clear that reliable sources indicate that elimination of the uptick rule may have resulted in increased volatility, I have no objection. The problem is with the graph (because it indicates a direct causal relationship) and with the association of the lifting of the uptick rule with the recent economic crisis.--RegentsPark (My narrowboat) 18:49, 14 April 2009 (UTC)

The critical section to read is this WP:SYNTH, a Wikipedia editor can't present someone else's research and then add their personal conclusion. The editor has to quote or paraphrase the source. There's another principle involved here called WP:DUE, the due weight to be given to the argument that replacement of the uptick rule with Regulation SHO was a cause of an overall market decline (or increase in volatility). Also, I think an opinion given without the data to back it up only eight weeks after the rule was changed is relevant to a September 2007 news article and it isn't relevant to an encyclopedia after eighty-plus weeks have passed. So some of this might have been true at the time but we don't bulk up the article with quotes from July 2007 to the present which support one point of view. patsw (talk) 20:53, 16 April 2009 (UTC)

The Madoff exception

“ The rule was designed to work during down-trending markets (to prevent abusive bear raids), but the poorly designed (and paid for by Wall Street lobbyists as the lobbying firm registered to represent Bernard L. Madoff, Dow Lohnes Government Strategies -- Bernard L. Madoff was famous in SEC regulatory circles as the man who gave his name to the “Madoff Exception,” the informal name for a measure that allowed his firm to flout the “uptick rule,” his firm spent more than $400,000 to influence the federal government) studies were performed in up-trending market. ”

If any editor wants to add this back, please discuss how this was verified and sourced. patsw (talk) 23:49, 16 April 2009 (UTC)

Markets around the world

i'm curious about which markets still effect the uptick rule? does the TSX, (i believe it does,) or ASX or TSE? i am willing to do a little research here, because i think it is relevant to the article, which largely discusses the US implementation; (HKEX is mentioned). any input? thanks!174.7.89.210 (talk) 18:28, 11 May 2010 (UTC)

I read the article and was left with the same question, (I believe due to time of last update) Is the uptick rule in effect now? If yes/no, then which markets does/doesnt uptick rule apply? I believe further research is needed. — Preceding unsigned comment added by 108.209.237.212 (talk) 05:41, 1 March 2012 (UTC)

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