Duncan Niederauer spoke to NYSE members in an Internet conference call Wednesday afternoon and said the exchange is in regular communication with the SEC, and while no decision has been made on how to proceed, the SEC is aware that the ban on short sales "isn't a long-term solution."
Niederauer along with NYSE regulation chief Rick Ketchum also said the exchange had a "bias" toward possibly reinstating the uptick rule or individual stock circuit breakers that would halt trading on a stock should it move more than maybe 10% to 20%. The uptick rule, which prevents a short sale unless the share price is higher than the last trade, was scuttled last year.
The SEC can extend the ban, but for no longer than 30 days in total.
"Having some kind of circuit breakers is better than lifting the ban and going back to where we were," said Niederauer, adding that the uptick rule would be the easiest solution since it would cover all stocks and could be implemented from a technological basis in a matter of days or weeks.
Niederauer also noted that the short selling ban has had an adverse effect on liquidity. Lawrence Leibowitz, group executive vice president and head of U.S. markets and global technology for the exchange, said the ban has kept traders that need to hedge their positions out of the market altogether.
NYSE executives said they welcome a return of short sellers, though Niederauer said these trades must be "governed, managed and overseen properly." - Donna Block
