May 3, 2009
I believe that the SECs action to explore short sale price restrictions and circuit breaker restrictions is critical to restoring investor confidence in the markets and promoting their stability. I saw that short sale data was made publicly available during the 2006 pilot test that resulted in the removal of the uptick rule. However, I couldnt find any similar data available for this current evaluation of short sale price or circuit breaker restrictions.
The SECs action would be much more effective if trading data showing transactions, particularly short sales, leading up to the various crisis points in the markets that happened last year were released. If such a release were done now, data could be analyzed to inform the public and assess the viability of any short sale restrictions needed. This would also be in keeping with President Obamas policy of transparency.
How can we critically evaluate the need for or the utility of these proposed restrictions without access to the empirical data regarding what part short sales played in the 2008 market crisis? For example, I would like to see data about short sales (e.g. number and percentage of all sales that were short sales over time) in the week and day before Lehman collapsed, or when Bear Stearns, Citibank, AIG, and others almost collapsed and had to be rescued by the Federal government.
I am a small investor with much of my retirement in the stock market. I lost a substantial amount of my holdings last year, and want to be sure that whatever restrictions are imposed will truly protect my investments. Otherwise I will move them to a place where they will be safe.