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Not only in China. In 2010, the US Securities and Exchange Commission restricted the ability to sell shares short if the share price has declined more than 10%

Not only in China. In 2010, the US Securities and Exchange Commission restricted the ability to sell shares short if the share price has declined more than 10%. https://www.sec.gov/news/press/2010/2010-26.htm https://www.sec.gov/news/press/2010/2010-26.htm Curious how there is no equivalent restriction on purchases if the share price has increased by 10%.

slededit 8y ago
It’s a very temporary restriction not at all comparable. It applies only until the next uptick and is essentially a strengthening of the circuit breaker rules. These rules are designed to slow trading down on the order of minutes to hours so market participants can catch up and make rational decisions. This is completely different than broad market distortions pervasive in both Japan and China - both in intent and effect.
- panarky 8y ago
  > These rules are designed to slow trading down If this were true, then there would be a symmetric rule to restrict purchases when prices increase. Since the rule only restricts sales and not purchases, its purpose must be to prevent price declines, not to regulate the velocity of trading.
  - slededit 8y ago
    Unlike with upswings, down swings come with margin calls which can cause downward spirals. The market can certainly get irrational on the upswing as well but the feedback mechanisms are more muted and slower.
seanmcdirmid 8y ago
China also has a circuit breaker against movements of 10% (they can't grow/shrink more than 10% a day). China also doesn't really allow for shorting of shares so I'm not sure what you are trying to show here?
triviatise 8y ago
selling shares short is selling shares you dont own. There is no restriction on selling shares you dont own. Short selling amplifies downturns because you dont have to own a share to sell it. There is no non option equivalent to short selling.

slededit 8y ago

It’s a very temporary restriction not at all comparable. It applies only until the next uptick and is essentially a strengthening of the circuit breaker rules. These rules are designed to slow trading down on the order of minutes to hours so market participants can catch up and make rational decisions. This is completely different than broad market distortions pervasive in both Japan and China - both in intent and effect.

panarky 8y ago
> These rules are designed to slow trading down If this were true, then there would be a symmetric rule to restrict purchases when prices increase. Since the rule only restricts sales and not purchases, its purpose must be to prevent price declines, not to regulate the velocity of trading.
- slededit 8y ago
  Unlike with upswings, down swings come with margin calls which can cause downward spirals. The market can certainly get irrational on the upswing as well but the feedback mechanisms are more muted and slower.

seanmcdirmid 8y ago

China also has a circuit breaker against movements of 10% (they can't grow/shrink more than 10% a day). China also doesn't really allow for shorting of shares so I'm not sure what you are trying to show here?

triviatise 8y ago

selling shares short is selling shares you dont own. There is no restriction on selling shares you dont own. Short selling amplifies downturns because you dont have to own a share to sell it. There is no non option equivalent to short selling.