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E9-8730 Amendments to Regulation SHO Proposed Rule The Securities and Exchange Commission ("Commission") is proposing amendments to Regulation SHO under the Securities Exchange Act of 1934 ("Exchange Act"). We are proposing two approaches to restrictions on short selling--one is a price test that would apply on a market wide and permanent basis ("short sale price test" or "short sale price test restriction") and one that would apply only to a particular security during severe market declines in that security ("circuit breaker"). With respect to the first approach, we propose two alternative short sale price tests: One based on the national best bid and the second based on the last sale price. With respect to the second approach, we propose two basic alternatives: One alternative is a circuit breaker rule that would temporarily prohibit short selling in a particular security when there is a severe decline in the price of that security (a "halt"), which could operate in place of, or in addition to, a short sale price test rule; and the second alternative is a circuit breaker rule that would trigger a short sale price test rule; we propose that such a short sale price test either be based on the national best bid for any security for which there has been a severe price decline or be based on the last sale price for any security for which there has been a severe price decline. Due to the extreme market conditions that we are currently facing and the resulting deterioration in investor confidence, we believe it is appropriate at this time to re-evaluate and seek comment on some form of short sale price test restriction, either in the form of a short sale price test such as the proposed modified uptick rule or proposed uptick rule, or a circuit breaker rule. For each of the proposed short sale price test restrictions and proposed circuit breaker rules, we are also proposing to amend Regulation SHO to require that a broker-dealer mark certain sell orders "short exempt." If the Commission adopts a short sale price test proposal or a circuit breaker proposal, and adopts a "short exempt" marking requirement, we are proposing that the implementation period for these amendments would be three months from the effective date of the amendments. 2009-04-20 2009 4 https://www.federalregister.gov/documents/2009/04/20/E9-8730/amendments-to-regulation-sho https://www.govinfo.gov/content/pkg/FR-2009-04-20/pdf/E9-8730.pdf Securities and Exchange Commission 466 The Securities and Exchange Commission ("Commission") is proposing amendments to Regulation SHO under the Securities Exchange Act of 1934 ("Exchange Act"). We are proposing two approaches to restrictions on short selling--one is a price test that would... 3235-AK35

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