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This is the final part of a three-part series on why the "plus-tick" rule should be reinstated. This rule, also known as the uptick rule, requires that any person selling a stock short must do so only at the price which is the higher of the last two discrete transactions. Part I looked at how the rule serves a vital function in the market by addressing imbalances.
In Part II, we discussed certain obscure but significant risks built into certain market practices such as basket trading and the use of leverage, and we examined some of the unintended consequences of having eliminated the rule to the detriment of the original purpose of capital markets.
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