Chapter 10 study notes Flashcards
shorting stock
Circuit Breaker
Rule 201
requires a trading center as defined in Regulation NMS to restrict short selling (no shorting at the
bid or lower) if a covered security declines by 10% or more from the prior trading day’s closing price.The rule does not apply to securities quoted on the OTCBB or in the Pink Sheets.
The restriction applies to the display and execution of short sales and is applicable during the
remainder of the trading day through the next business day.
the circuit breaker is in effect and the current national bid is $26.75, a short sale would be
permitted only at a price above $26.75.
Short Exempt
A broker-dealer is permitted to mark an order ticket short exempt under one of two conditions. This
is in addition to sell long or sell short that was previously discussed.
1. If the order is priced above the national best bid at the time it is submitted (described previously)
2. If the order meets one of the exceptions specified in Rule 201
