Finance Researchers Encouraged To Study Regulation Sho Pilot That Starts May 2 For Immediate Release

Securities and Exchange Commission, Apr 27, 2005

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.

The Commission's staff has arranged for the appropriate self regulatory organizations to make transactional short selling data public on a monthly basis.