§ 242.201 — Price-test restriction (alternative uptick rule).

Rule 201 imposes a short-sale price-test restriction on a "covered security" (any NMS stock) that has experienced a decline in price of 10% or more intraday relative to the prior day's closing price on the listing market. Once triggered, the restriction prohibits the display or execution of a short-sale order at a price less than or equal to the current national best bid in the covered security for the remainder of that trading day and the entirety of the next trading day.

The rule is administered principally by the exchanges and the national securities association; broker-dealers comply via short-sale price-test reference data supplied by the exchanges and via their own order-handling systems. Order-marking of short-exempt sales is governed by Rule 200(g)(3) (see above).

This excerpt does not reproduce Rule 201 in full. Broker-dealers should ensure their order-handling systems are properly configured to consume the price-test data and to reject or re-price short-sale orders that would violate the restriction.