In plain terms
The Securities and Exchange Commission (SEC) rule triggered when a stock declines at least 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…
The Securities and Exchange Commission (SEC) rule triggered when a stock declines at least 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.