Uptick Rule: Form vs. Substance

"It's physics; you wouldn't understand."

It brings a smile to my face to recall the tongue-in-cheek response our high school physics teacher told us to give kids that asked what we were doing on the lawn outside the school -- we were completing an angular momentum lab. It was a great deadpan comedic line, giving the geeky physics kids a rebellious retort to the flack we took from others.

Having been one to actually utter that line decades ago, I recognize it now. You see, this is essentially the line we are getting from the quants as the concept of bringing back the uptick rule gains momentum. Only this time it takes the form of "The code in these programs is so embedded, it would be impossible to go back," or "There are so many trades that take place with the push of a button, this would be impracticable," or something to that effect. However, these lines aren't being uttered tongue-in-cheek. The quants are actually trying to get us to believe them.

You mean to tell me that you can create all of these sophisticated macro programs that trade thousands of stocks a second based on complex algorithms, but you cannot figure out how to do so with an uptick rule? That is simply insulting.

The intent of the rule is to provide a circuit-breaker on destructive, rapid-fire short selling. So if the program traders are slowed a bit, doesn't that seem to fit the intent? What am I missing here?

I've got an idea: if you cannot comply with not only the letter but also the intent of the uptick rule, don't trade. My guess is you'll be able to figure it out -- put the Ph.D. in rocket science to work.