Finance Researchers Encouraged To Study Regulation Sho Pilot That Starts May 2
The SEC launched a regulatory pilot program on May 2, 2005, suspending the 'tick' test and Nasdaq Bid Test for a sample of stocks to study their impact on market quality, inviting researchers to analyze whether removing these short-selling rules improves efficiency, with no fraud, charges, or penalties involved.
The Securities and Exchange Commission announced a pilot program under Regulation SHO beginning May 2, 2005, to temporarily suspend the 'tick' test and Nasdaq Bid Test on a stratified sample of stocks. The goal is to evaluate whether removing these short-selling restrictions enhances market quality and whether a proposed Uniform Bid Test should replace them, especially for smaller stocks. The SEC is providing anonymized monthly transactional data to researchers and encouraging academic studies, with no allegations of fraud, misconduct, or financial penalties.
On April 26, 2005, the SEC announced a regulatory pilot program under Regulation SHO to begin on May 2, 2005, suspending the 'tick' test and Nasdaq Bid Test for a stratified sample of stocks. The initiative aims to study whether removing these short-selling restrictions improves market quality, liquidity, and efficiency, and whether a proposed Uniform Bid Test should be adopted as a replacement, particularly for smaller-cap securities. To support academic research, the SEC arranged for self-regulatory organizations to release anonymized monthly short-selling transaction data. Researchers were invited to submit studies analyzing the pilot’s effects, with all data and methodology details available via SEC web portals. There are no allegations of fraud, misconduct, or enforcement actions in this announcement—it is purely a data-driven regulatory experiment. The program reflects the SEC’s broader effort to evaluate the effectiveness of short-selling rules in modern markets. No individuals, firms, or entities are accused or penalized; the focus is entirely on empirical research and policy evaluation.
Extracted insights
- organization Nasdaq
- agency Securities and Exchange Commission
- location Washington D.C.
- Securities and Exchange Commission Invites Researchers To Study The Role Of Sec Rule 10a-1 And Nasd Rule 3350 In Promoting Market Quality
- The Commission Called For A Study Of These Rules When It Adopted A New Regulatory Framework Governing Short Selling Of Securities
- The Commission Designed A Pilot Program That Suspends The Tick Test And The Nasdaq Bid Test For A Stratified Sample Of Stocks
- The Commission's Staff Arranged For Self Regulatory Organizations To Make Transactional Short Selling Data Public On A Monthly Basis
- The Commission Provides Links To The Regulation Sho Adopting Release, The Short Selling Data, And Information On How To View And Submit Studies On The Pilot
FINANCE RESEARCHERS ENCOURAGED TO STUDY REGULATION SHO PILOT THAT STARTS MAY 2 FOR IMMEDIATE RELEASE 2005-67 Washington, D.C., April 26, 2005 - The staff of the Securities and Exchange Commission invites researchers to study the role of SEC Rule 10a-1 (the "tick" test) and NASD Rule 3350 (the Nasdaq Bid Test) in promoting market quality. These rules regulate the execution of short sales on exchanges and Nasdaq. The Commission called for a study of these rules when it adopted a new regulatory framework governing short selling of securities, Regulation SHO, in June 2004. The staff is seeking input on whether market quality would change without these short sale rules, whether the alternative Uniform Bid Test described in the proposing release is appropriate, and whether that rule should be extended to smaller stocks. To facilitate the study of these questions, the Commission has designed a pilot program that suspends the "tick" test and the Nasdaq Bid Test for a stratified sample of stocks (see http://www.sec.gov/rules/other/34-50104.htm and http://www.sec.gov/rules/other/34-50747.htm). The Commission's staff has arranged for the appropriate self regulatory organizations to make transactional short selling data public on a monthly basis. For more information on the pilot program and the pilot data see http://www.sec.gov/spotlight/shopilot.htm. This web page provides links to the Regulation SHO adopting release, the short selling data, and information on how to view and submit studies on the pilot to the Commission. http://www.sec.gov/news/press/2005-67.htm Home | Previous Page Modified: 04/26/2005
FINANCE RESEARCHERS ENCOURAGED TO STUDY REGULATION SHO PILOT THAT STARTS MAY 2 FOR IMMEDIATE RELEASE 2005-67 Washington, D.C., April 26, 2005 - The staff of the Securities and Exchange Commission invites researchers to study the role of SEC Rule 10a-1 (the "tick" test) and NASD Rule 3350 (the Nasdaq Bid Test) in promoting market quality. These rules regulate the execution of short sales on exchanges and Nasdaq. The Commission called for a study of these rules when it adopted a new regulatory framework governing short selling of securities, Regulation SHO, in June 2004. The staff is seeking input on whether market quality would change without these short sale rules, whether the alternative Uniform Bid Test described in the proposing release is appropriate, and whether that rule should be extended to smaller stocks. To facilitate the study of these questions, the Commission has designed a pilot program that suspends the "tick" test and the Nasdaq Bid Test for a stratified sample of stocks (see http://www.sec.gov/rules/other/34-50104.htm and http://www.sec.gov/rules/other/34-50747.htm). The Commission's staff has arranged for the appropriate self regulatory organizations to make transactional short selling data public on a monthly basis. For more information on the pilot program and the pilot data see http://www.sec.gov/spotlight/shopilot.htm. This web page provides links to the Regulation SHO adopting release, the short selling data, and information on how to view and submit studies on the pilot to the Commission. http://www.sec.gov/news/press/2005-67.htm Home | Previous Page Modified: 04/26/2005