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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Anthony@Pacific who wrote (50838)	1/30/2000 11:01:00 PM
From: Anthony@Pacific	Respond to of 122087

1991 Congressional report on shortsales..we have waited 9 years its about time to GET off our asses and get equal access!!!!!! 3. 1991 Congressional Report on Short Selling In 1991, the House Committee on Government Operations released a report on short selling.38 The House Report stated that the "effects of short selling on the securities markets are not widely understood," and that "[m]any people have questioned the effectiveness of the present uptick rule and, by implication at least, question whether any purpose would be served by implementing a similar rule for NASDAQ trading." 39 The House Report made numerous findings and recommendations, including that: (1) short selling plays an important and constructive functional role in the equity market; (2) the uptick rule acts as a price stabilizing force and should be retained; (3) short sale regulation should be extended to the Nasdaq system; (4) many complaints about short selling are not soundly based and may be the result of a poor understanding of short selling; (5) "a pattern of abusive and destructive rumor mongering, targeted specifically at companies in the equity securities of which some short-selling investors have established major short positions, appear[ed] to be occurring;" (6) a large part of the problem with equity securities targeted by short sellers is the psychological misperception that short sellers possess much greater manipulative power than they really do; (7) a method for collecting daily short-selling activity and weekly short interest data from broker-dealers should be developed and this information should be available electronically to the market in aggregate form; and (8) Congress should enact a reporting requirement for large individual short positions.40 Since the House Report, a number of changes have occurred that impact its findings. The NASD adopted a short sale rule covering NMS securities. Both the NYSE and the NASD adopted rules requiring members to report data on their short sale activities. In 1991, the Commission published a concept release requesting comment on reporting material short positions.41 The Commission has not taken any further action on this matter. D. Recent Developments Despite the many studies and recommendations, the basic provisions of Rule 10a-1 have remained unchanged for 60 years. Developments in the markets, however, may have diminished the need for the Rule in its current form. Among other things, the national securities exchanges today have high levels of transparency and regulatory surveillance. Transparency helps market participants observe and evaluate market price movements which limits the ability of short sales to unevenly affect prices. The self-regulatory organizations (SROs) also have sophisticated surveillance technologies that allow them to monitor market activity on a real-time basis. This surveillance reduces the risk of undetected manipulation and permits regulators to monitor the types of activities that Rule 10a-1 is designed to prevent. As the markets change, commentators continually question the relationship between the objectives of Rule 10a-1 and its operation.42 Short selling is instrumental to a growing number of sophisticated investment models and instruments. For example, short sales are used to hedge option positions and to engage in a variety of arbitrage strategies.43 Short selling is also integral to other trading and investment strategies that are not tied to individual securities, but involve baskets of securities. The restrictions in the Rule may inject unnecessary inefficiencies into such trading strategies. To accommodate the developments, we have granted a number of requests for relief from Rule 10a-1.44 The growing array of requests for relief indicate that present short sale regulation may have become unduly burdensome and possibly ill-suited for the present and future markets.