Man Group CEO Peter Clarke has thrown his weight behind the return of the "uptick rule," a short-selling restriction that he said could prevent sudden market crashes.
Clarke told the London School of Economics Alternative Investment Conference yesterday that the rule, first instituted during the Great Depression, abolished in 2007 and revived in part in 2010, could prevent high-frequency traders and quantitative programs from fueling "flash crashes" like that seen in 2010.
"From a personal perspective, reintroducing the uptick rule… would not be a particularly bad thing," he said. "You can only short when the previous trade was an uptick, which would stop some of the… quant strategies from becoming systemic in certain markets over the short term."
In 2010, the SEC revived a form of the rule, imposing the uptick requirement on stocks that drop 10% or more in a single day.