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Short Selling on the New York Stock Exchange and the Effects of the Uptick Rule

Posted: 28 Jan 1999  

Gordon J. Alexander

University of Minnesota - Twin Cities - Carlson School of Management

Mark A. Peterson

Southern Illinois University at Carbondale - Department of Finance

Abstract

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

Suggested Citation

Alexander, Gordon J. and Peterson, Mark A., Short Selling on the New York Stock Exchange and the Effects of the Uptick Rule. Journal Of Financial Intermediation, Vol. 8, No. 1. Available at SSRN: https://ssrn.com/abstract=145635

Gordon Alexander

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-8598 (Phone)
612-624-1335 (Fax)

Mark Peterson (Contact Author)

Southern Illinois University at Carbondale - Department of Finance ( email )

Mailcode 4626
Carbondale, IL 62901-4626
United States
618-453-1426 (Phone)
618-453-5626 (Fax)

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