There has been no shortage of changes to the short-selling rules over the past year or so. The financial crisis and the subsequent financial stock meltdown led to all sorts of temporary bans and other restrictions--which generated the need for technology tweaks at many firms.

There has been a lot of debate as the SEC mulls over what sort of permanent regulations to impose. Traders now reports that some sort of price-test-oriented approach will be embraced; that will effectively bring back the old uptick rule. Many are betting on the "alternate uptick rule" proposed by the SEC last August. The rule would require short sellers to post an offer at least 1 cent above the best bid.

What remains to be seen is whether a circuit-breaker trigger will also be adopted. The trigger would only impose the new rule if the markets fell a certain percentage. Other new regulations are also on the way, including rules that will require much more disclosure of short trades in near-real-time. Most firms will have a firm grasp on how to deal with the software changes. But it makes sense to start thinking about this now.

For more:
- here's the Traders article

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