The SEC has suggested a new approach to curb short selling. In addition to the five previous ideas it has submitted for public comment, it has just submitted another one, reports the New York Times.

The latest idea is that short sales only be executed at a price higher than the current best price. The idea is close to the old uptick rule, which was eliminated in July 2007; that rule required the price to be higher than the price of last different price or the last trade.

The proposal is much cleaner and will certainly be easier to program. The old uptick rule would be hard to implement now, given the range of execution venues now in play. As we've noted, these rules always carry added IT costs  to cover the tweaks. This may or may not be the favored approach. Most likely it would be triggered by circuit breakers, as would the other proposals. An even cleaner approach would be to shut down short trading if circuit breakers are triggered. 

For more:
- here's the article

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