The head of the U.S. Securities and Exchange Commission said on Monday that it should not ban short-selling of shares, amid speculation on further measures the agency might take to arrest a market rout that stems from fears the coronavirus will spark a global recession.
FILE PHOTO: Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, speaks at the Economic Club of New York luncheon in New York City, New York, U.S.,September 9, 2019. REUTERS/Shannon Stapleton
“You need to be able to be on the short side of the market in order to facilitate ordinary market trading,” Clayton said in an interview on CNBC on Monday, adding that he understands the concerns by some investors but does not favor a ban. Later, in 2010, the SEC adopted an alternative uptick rule that imposed restrictions on short-selling only when a stock has triggered a circuit breaker by declining in price by at least 10 percent in one day. Under the alternative rule, once the price of the security is above the current national best bid, the practice, which critics say can exacerbate market moves amid panic selling, is permitted.
“We need market integrity, but we believe we’re taking care of it with the alternative uptick rule,” added Clayton.
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