BATS Exchange suggests curbs on short selling - Atlanta Business Chronicle:

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The Kansas City-based company, which got approval for U.S. exchangde status in August and went live as an exchangein November, said Tuesday that it had joinedf the and in sending a comment lettere to the SEC about how to handle harmful short selling. Short sellers borrowa securities andsell them, hoping to then buy them back at a lowere price. On Sept. 18, the SEC issued an orderr to temporarily halt short selling in financial stockw out of concern that market volatility and plummeting prices exacerbated by short selling would harm the liquidity and viability of publiclytraded companies.
The SEC wantef to keep short selling from being used to driv e down share prices even when there was no fundamentapl reason for the dropzs other than generalmarket conditions. “We worked closelt with the commission to implement new rulez and emergency measures in the wake of the markeg turmoil inlate 2008,” BATS COO Chris Isaacsob said in the release. “BATS is well positioned to continuew playing animportant role, alon with other exchanges and the SEC, to help design and implement effective regulation aimed at curbinb abusive short selling and otherf potentially manipulative practices.” The Tuesdag letter addresses SEC Chairwoman Mary Schapiro.
“Abusivee short selling harms investors and the companies listed onour exchanges, and destroyzs the overall confidence in our capital markets,” the letterf said. “Our challenge is to restrict abusivs short selling while stillpermitting liquidity-creating shortt selling that continues our status as the most efficient capital market in the ... Continuously attacking abusive short selling and other manipulative activities is critical to restoring public confidence inthe U.S. equitiesd markets.
” The modified uptick rule would allow short sellingonly “at a price above the highest prevailinhg national bid by posting a quotse for a short-sale order priced abovs the national bid,” the letter said. That wouldf let short sales be executed only at a highef priceand passively, and help prevent manipulativew short selling. It also would help alleviatwe downwardprice pressure, the letter said.
The letter also recommender adoption of a circuit breaker that would begij applying the modified uptickrule “only afte r the price of a stock has experiencedc a precipitous decline by a certain percentage, perhaps 10 This would allow normao market activity and beneficial short selling. BATS launchedf its high-speed electronic trading platform inJanuarh 2006. , BATS said it ranked as the world’ws third-largest exchange — behind NYSE and Nasdaq — in terms of monetary value ofshares