Regulation SHO Pilot

Overview

The SEC issued a final rule amending its short sale price test. The rule eliminated the Rule 10a-1 tick test as well as the short-sale price tests of any self-regulatory organization, including NASDAQ’s Rule 3350 bid test. NASDAQ eliminated short-sale validation on July 6, 2007.

The SEC rule also removed the Regulation SHO requirement that a broker-dealer mark a sell order “short exempt” if the seller is relying on an exemption from a price test.

NASDAQ maintained the list for the Reg SHO price test change until October 4, 2007. Effective October 5, 2007, broker-dealers are no longer permitted to mark sales “short exempt”; instead all short sales must be marked “short”.

For the latest information, please see our Regulation SHO page.