April 24, 2009
There is a ruling that if an investor sells a stock and uses the proceeds to buy another stock the same day, he may not sell the second stock within 3 days. If he does his broker will prevent him from buying something else until the trade settles. Settlement takes 3 business days.
If short sales were required to remain open for a minimum of 3 business days, while the trade settles, I think computer generated short-selling programs would beome too risky. Wouldn't that be easier to enforce than circuit breakers?