Let me start out by defining what the Uptick rule is in my own layman terms:
Basically, it means that when a short seller of a stock will have to wait until a buyer comes in and buy a stock of the company so that the price of the stock goes (ticks) up; after which, the stock shorter can now short the stock.
Personally, I think the remove of the uptick rule, means that everybody jumps on the bandwagon when a stock's prices starts dropping like a stone... I can see the removal of this rule being very damaging for any company. I can imagine that the number of people shorting stocks has probably doubled with the removal of this rule, not to mention the increase in hedge fund activity.
I believe the measure was implemented way back when to help prevent future market downturns like the "Great Depression" back in the 1930s...
So, this rule was removed, and now high quality stocks are having bear raids on them, that are driving them into the ground, ex. Morgan Stanley...
I thought this was a very stupid move... Why does Cox think the rule was initially implemented way back when...? I read that they (Cox & SEC) ran a pilot program with the removal of the rule on 1000 stock, but that was during a bull market, and besided, the market isn't really a predictable thing by nature, they are gambling with 401Ks and other investments. Very stupid and unnecessary... After all, what was the rule hurting by being in existance?
Well, at least Cox opened one eye and is now cracking down on naked short selling. That might slow the quickening of bankruptcies and stock devaluation of the american financial systems...
- D
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