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Abstract
Regulation SHO, which the Securities and Exchange Commission adopted on July 28, 2004, to modernize the rules governing short-sale transactions, provides for a one-year pilot program exempting certain liquid securities from short-sale tests and suspending short-sale tests for after-market trading (Rule 202T). Specifically, during the pilot program, the SEC will: 1. suspend the application of the tick test of Rule 10a-1 under the securities Exchange Act of 1934 and any short-sale price test of an exchange or national securities association with respect to short sales in securities contained in a subset of approximately 1,000 stocks that the SEC has selected from the Russell 3000 index for inclusion in the pilot program and 2. suspend the application of the tick test to short sales in Russell 1000 index securities effected between 4:15 pm Eastern Time and the open of the consolidated tape the following day and to short sales in all other exchange-listed securities effected between the close of the consolidated tape and the open of the consolidated tape the following day.