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Cutting Short Short Sales

WASHINGTON (CN) - The Securities and Exchange Commission is seeking public comment on whether short sale stock price restrictions should be restored, to reduce market volatility and boost investor confidence.

The SEC is considering two approaches to restrict short selling. One is permanent and market-wide, and its test is based either on the last sale price, or on a short sale price test of the national best bid on all securities. The second approach is called a circuit breaker and would ban short selling in a particular security for the rest of the day if there is a severe decline in the price of the security. The second approach is temporary.

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