Alternative Uptick Rule (Rule 201)
Idea
A securities rule (SEC Rule 201) that kicks in when a stock falls 10% or more in a day, restricting how short sellers can trade for the rest of that day and the next. Its significance here: during the extreme GameStop volatility of January 28, 2021, this retail-level price protection was overridden by much bigger clearing-house capital demands — the rule protects the visible price layer while deeper settlement-level mechanics stay untouched.
The engine's definition — word for word
SEC rule triggered when a stock declines ≥10% from prior day's close, restricting short sales to prices above the National Best Bid (NBB) for the remainder of the current day plus the following day. Empirical studies show Rule 201 reduces short-sale volumes and stabilizes spot volatility by forcing short sellers to provide liquidity on the ask side. During January 28 2021 extreme gamma volatility in GME, Rule 201 was subordinate to the overriding DTCC margin intervention — retail price controls at the bid-tick level are mechanically outranked by macro-level capital controls exerted by clearing requirements. Structural significance: the regulatory focus on price-tick rules provides announcement-layer protection while leaving clearing-level structural extraction mechanisms intact.
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