Big Board weighs reviving program-trading 'collar.' (New York Stock Exchange)(Money & Investing)
Article Abstract:
The New York Stock Exchange (NYSE) will consider reinstituting a limit on program trading that it stopped enforcing in 1988. The volatility of the stock exchange and a protest by its own listed companies has compelled the NYSE to investigate changes in the program trading process. It is unlikely that the exchange will ban computer-assisted trading strategies entirely, although many investors recommend such a ban. The limit, or 'collar,' would be instituted if the Dow Jones Industrial Average moves up or down 50 points in one day. A collar was placed on program trading in late 1988, and was not successful. Traders found ways to circumvent the block and use the exchange's electronic trading system. Another likely plan is to expand monthly reports of the top 15 program trading firms to specific days or hours of heavy program trading. Many companies are ceasing their index-arbitrage program trading.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1989
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'Uptick' rule exemption ticks off program trade foes
Article Abstract:
A rule enacted by the SEC in 1938, the 'uptick' rule, which was enacted to stop the sale of already declining stocks, could be used today against program traders. Merrill Lynch and Co and other program traders were given an exemption to the 'uptick rule' in 1986, but critics who believe program trading causes stock market volatility want the exemption to be revoked. The SEC enacted the uptick rule to control excesses of 'short selling,' which refers to borrowing shares and then immediately selling them for cash. Short selling is used by investors who anticipate that the price of a stock will drop. If the price falls, a short seller can buy shares at a lower price to pay back a lender.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1989
User Contributions:
Comment about this article or add new information about this topic:
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