How Does the Short-Sale Rule Work?
Once the circuit breaker is tripped, short-sale orders can only be executed at a price higher than the current best bid. You can’t ‘hit the bid’ on a short-sale order with a stock under SSR. Which means you have to wait for the price to go up to your ask price for the order to execute.
Following on with the example…
The hypothetical stock drops all the way to 85 cents a share from the previous day’s close at $1.00. You’ve been waiting for a big crack to happen right around 85 cents. You’re sure when it breaks through 85 cents it’s bye-bye time for this stock. You’ve created a trading plan.
Under the short-sale rule, if the best bid is 85 cents you can’t short at 85 cents. You have to put in your short-sale order at a price higher than the bid. A bid for your (higher) ask price has to come through for the order to get executed. So, it’s still an uptick rule. In that respect, it’s similar to the original SSR.