Short Sale Restriction (SSR)
SSR is a rule defined by the SEC restricting short sales on a downtick.
What does it do
The SSR does not restrict shorting of the stock. It only does not allow shorting when the last trading price was already going down.
Without the SSR in effect a shorter could do: sell, sell (downtick), sell (downtick), sell (downtick), sell (downtick). Driving down the price.
With the SSR in effect the stock should go: sell (downtick), buy (uptick), sell (downtick), buy (uptick)
When is it triggered?
All stocks traded on the NYSE are automatically eligible to be put on the Short Sale Restriction list. The rules when the SSR becomes effective are:
- It must happen during regular trading hours (9.30am - 4pm), not premarket and after hours
- The reference price used is the closing price of previous trading day
- The price should drop below 10% of the reference price
Example: Stock GME closes at $120. If next day the price drops below $108 ($120 - ($120 * 10%)) the SSR will become effective.
How long is it applied
When the SSR is triggered it immediately become effective till at least end of next trading day.