This Day In Market History: NYSE Starts Disclosing Short Sales

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On May 25, 1931, the New York Stock Exchange began regularly reporting short selling data for the first time.

Where The Market Was: The Dow finished the day at 132.87. The S&P 500 traded at around 13.80.

What Else Was Going On In The World? In 1931, the Empire State Building opened its doors in New York, and unemployment in the U.S. doubled to 16.3% as the Great Depression set in. A loaf of bread cost 8 cents.

Short Sellers Come Out Of The Shadows: The Dow dropped 32.6% in 1930 as the American economy took a nosedive, but short sellers in the stock market made a killing. Short sellers took a lot of heat for the stock market crash of 1929, which led to the enactment of the uptick rule shortly thereafter.

The uptick rule requires short selling orders to be filled only during upticks in share prices and is meant to mitigate the negative impact of short sales. The uptick rule was abolished in 2007 just prior to the market crash of 2008.

In May 1931, the NYSE made the decision to regularly disclose short sale data for the first time so traders could know just how much money was being bet against the market.

Today, traders routinely use short-selling-related metrics such as short volume, short interest, utilization rate and short percent of float to help inform trading decisions.

Photo by Thomas J. O'Halloran via the Library of Congress.

Posted In: Citron Researchthis day in market historyShort SellersEducationMarketsGeneral