The Uptick Rule¶
Rule 201 of Regulation SHO is an SEC restriction that activates when a stock falls 10% or more from its prior day's closing price, limiting new short sales to prices above the current national best bid. The restriction remains in effect for the remainder of the trigger day and the entire following trading session. It is designed to prevent short sellers from accelerating a stock's decline by hitting bids into a crash.
HOW IT WORKS¶
The trigger is mechanical: if the intraday last-sale price touches or drops below 90% of the prior close, Rule 201 activates immediately across all venues — exchanges, dark pools, and off-exchange. Once active, short sale orders must be priced at least one tick above the national best bid; marketable short market orders are rejected or converted. Market makers engaged in bona fide hedging receive limited exemptions. The rule does not prevent further declines and does not restrict put buying or synthetic short exposure created through options.
IN TAPEBOARD¶
Tapeboard displays the SSR flag directly on the ticker when Rule 201 is active, so traders can identify restricted names without manually checking circuit-breaker lists. Short-side traders use this to adjust execution to limit orders pegged above the bid, accepting wider slippage on entries. Long and day traders filter for SSR-flagged stocks to identify potential squeeze candidates, as restricted short adding removes sell pressure and can force crowded shorts into covering.