Nasdaq Decoder Ring, Episode 3

By: Ray Pellecchia

File Under: Miscellaneous

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Nasdaq's Greifeld said: "If it's properly conceived and properly executed, (the uptick rule) certainly can provide some psychological benefit for the market.
-- Reuters 12 March (sorry, no link available)

Gosh, that sounds familiar. Where have I heard that before? Oh wait it was here:

Duncan Niederauer, CEO of NYSE Euronext, would like to see the Securities and Exchange Commission reinstate the uptick rule for short sales, even if it's mainly for the sake of bucking up "investor psychology."
-- Traders magazine on 5 March, quoting Duncan speaking on 3 March

Yes, yes, that was it -- investor psychology. I thought maybe there was an echo in here.

Apart from that bit of deja vu, I was struck by the following:

Here's Mr. Greifeld on 2 Oct. 2008, as quoted by Reuters, calling for single-stock "circuit breakers" instead of an uptick rule:

"The uptick rule ... would be in the marketplace all day every day having a negative effect on the fairness and efficiency of the marketplace," Greifeld told issuers and media on the call.

Then here's SEC Chairman Mary Schapiro yesterday, 11 March, quoted by Associated Press via Yahoo! Finance:

Dramatic changes in the global economy may merit restoring a federal rule aimed at preventing a massive plunge in a stock price caused by a rush of short sellers, the head of the Securities and Exchange Commission said Wednesday.

SEC Chairman Mary Schapiro said "hopefully" by next month the agency will open for public comment a proposal to reinstate the so-called uptick rule.

And finally here's Mr. Greifeld yesterday, to quote the Reuters article more completely:

Nasdaq's Greifeld said: "If it's properly conceived and properly executed, (the uptick rule) certainly can provide some psychological benefit for the market.

"But the uptick rule as it existed in the past does not apply in the post-decimalization world," he said. Decimalization has made the prices of stocks more specific, complicating any new uptick rule.

Greifeld said he doesn't expect a reinstatement of the uptick rule to have an impact on trading volumes.

Gotta go now, I haven't had breakfast. Suddenly I'm thinking of waffles.