Short Selling on the New York Stock Exchange and the Effects of the Uptick Rule
Gordon J. Alexander
University of Minnesota - Twin Cities - Carlson School of Management
Mark A. Peterson
Southern Illinois University at Carbondale - Department of Finance
Journal Of Financial Intermediation, Vol. 8, No. 1
We examine the impact of Rule 10a-1, the Uptick Rule, on short-sell orders sent to the NYSE. The principal finding is that the execution quality of short-sell orders is adversely affected by the Uptick Rule, even when stocks are trading in advancing markets. This is inconsistent with one of the three stated objectives of the rule, i.e., to allow relatively unrestricted short selling when a firm's stock is advancing so that the rule does not affect price discovery during such times.
JEL Classification: G18, K22
Date posted: January 28, 1999
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