SEC To Seek Comments On Short Sales

The U.S. Securities and Exchange Commission voted unanimously to seek public comments on all the proposed rules that seek to limit short selling.

There are two types of proposals the SEC will consider possibly enacting after a 60-day comment period. One type aims to impose market-wide sales restrictions and another instead targets particular stocks that are in rapid decline.

The two market-wide restrictions the SEC will consider include a rule similar to the old "uptick" rule and a modified uptick rule similar to Nasdaq's former bid test.

In addition, the SEC also will solicit comments on three different types of "circuit-breaker" models, which would impose various restrictions on short sales for the remainder of a trading session if a particular security declined by 10%.

If a circuit breaker is triggered, then traders could be subject to either an uptick restriction, a bid test restriction, or an outright short-selling ban on a particular security for the rest of the day.