Uptick Rule

Uptick Rule
A former rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1 and was implemented in 1938. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines.

The uptick rule is also known as the "plus tick rule".

The SEC eliminated the rule on July 6, 2007, but in March of 2009, following a conversation with SEC Chair Mary Schapiro, Rep. Barney Frank of the House Financial Services Committee said that the rule could be restored. Frank's conversations were spurred by a call for the return of the rule by several members of Congress and legislation reintroduced on January 9, 2009, for its reinstatement. On April 9, 2009, the SEC approved the release of five proposals for reinstating the uptick rule, which will each be put out for a 60-day public comment period.

By entering a short sale order with a price above the current bid, a short seller ensures that his or her order is filled on an uptick. The uptick rule is disregarded when trading some types of financial instruments such as futures, single stock futures, currencies or market ETFs such as the QQQQ or SPDRs. These instruments can be shorted on a downtick because they are highly liquid and have enough buyers willing to enter into a long position, ensuring that the price will rarely be driven to unjustifiably low levels.


Investment dictionary. . 2012.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • Uptick rule — The uptick rule is a securities trading rule used to regulate short selling in financial markets. The rule mandates, subject to certain exceptions, that when sold, a listed security must either be sold short at a price above the price at which… …   Wikipedia

  • Uptick Rule — A Depression era rule regulating short selling. Discussing the various options for regulating short selling† proposed by the Securities and Exchange Commission, the A.P. reported: One option the Securities and Exchange Commission advanced is… …   Dictionary of unconsidered lexicographical trifles

  • uptick rule —   regola dell incremento   Regola in atto nella Borsa degli Stati Uniti in base alla quale la vendita allo scoperto di un titolo può essere effettuata esclusivamente ad un prezzo di un uptick superiore a quello dell ultima transazione …   Glossario di economia e finanza

  • uptick rule — SEC rule that selling short is allowed only on an up tick. Bloomberg Financial Dictionary …   Financial and business terms

  • Uptick — Règle de l uptick La règle de l up tick ((en) uptick rule) est une règle de trading utilisée pour réguler les ventes à découvert sur les marchés financiers. Cette règle impose, sous réserve de certaines exceptions, que lorsqu une valeur mobilière …   Wikipédia en Français

  • Uptick — A term used to describe a transaction that took place at a higher price than the preceding transaction involving the same security. The New York Times Financial Glossary * * * uptick up‧tick [ˈʌptɪk] noun 1. [countable usually singular] FINANCE a …   Financial and business terms

  • Short-Sale Rule — A Securities and Exchange Commission (SEC) trading regulation that restricted short sales of stock from being placed on a downtick in the market price of the shares. Short sales could only be permitted on upticks (last trade higher than the one… …   Investment dictionary

  • Règle de l'uptick — La règle de l uptick ((en) uptick rule) est un mécanisme d encadrement du prix appliqué aux ventes à découvert sur les marchés financiers. Cette règle impose, sous réserve de certaines exceptions, que lorsqu une valeur mobilière est vendue, elle… …   Wikipédia en Français

  • short-sale rule — An SEC rule requiring that short sales be made only in a market that is moving upward; this means either on an uptick from the last sale, or showing no downward movement. Bloomberg Financial Dictionary …   Financial and business terms

  • Day trading — This article is about the practice. For the occupation, see Day trader. Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close… …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”