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To: Dominick who wrote (3630)	4/3/1998 5:01:00 AM
From: Dirk Hente	Read Replies (2) \| Respond to of 12617

[short sale rule - minimum increment rule] my understanding of the short sale rule (IM-3350) is as follows: 1. (down market rule) You can not effect a short sale at or below the inside bid for a security if there is a red arrow next to the security's symbol on the screen.The Nasdaq disseminates symbols to denote whether the current inside bid is an 'up bid' or a 'down bid' indicated by a green 'up' arrow and a red 'down' arrow. 2. ( Minimum Increment rule) A short sale on a down bid, is a 'legal' short when the short sale is executed at a price at least 1/16 above the current inside bit when the current inside spread is 1/16 or greater. If the current spread is less than 1/16, however, the short sale must be executed at a price equal to or greater than the current inside offer price. (Market makers who are Primary Market Makers (PMM's) are eligible to rely on the exemption from the NASD short sale rule) The Minimum Increment rule has recently been changed for spreads below 1/16, here are 2 links discussing that matter: SEC Approves Amendments To Legal Definition Of Short Sale: nasdr.com SEC Approves Amendments To ACT Rules To Require Market Makers To Denote When They Have Effected An Exempt Short-Sale nasdr.com