Investor Relations 101

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NIRI Short Selling Survey

Background:

The SEC is considering imposing new short sale restrictions by amending Regulation SHO, and is proposing two approaches:

The first approach is a price test (“uptick rule”) that would apply on a market wide and permanent basis.

The SEC believes a price test will help restore investor confidence by allowing relatively unrestricted short selling in advancing markets, while restricting short selling at successively lower prices and thereby potentially helping prevent abusive or manipulative short selling.

The second approach (“circuit breaker”) would apply only to a particular security during severe market declines in that security.

The SEC believes that halting short selling following a significant decline in a security’s price would allow for sufficient time to re-establish equilibrium between buying and selling interests in an orderly fashion. It would also ensure the market participants had a reasonable opportunity to become aware of, and respond to, a significant decline in a security’s price.