with JBO arrangements and fulfill the Federal Reserve Board's mandate for the SROs to provide rules that "ensure the reasonableness of JBO arrangements." 58 I. Short Sales A short sale occurs when a market participant sells a stock that he does not own. If the price declines, he can buy the stock later at the lower price and deliver it to the purchaser. If the price rises, however, he will have to buy the stock at the higher price, incurring a loss. Day-traders frequently sell stock short, hoping that they can capture small incremental profits when stock prices decline. Short selling is lawful and not unique to the day-trading industry. The Exchange Act specifically authorizes the SEC to address short selling with rules. 59 The SEC adopted Exchange Act Rule 10a-1 to prevent the added downward momentum to the price of a stock that short selling may cause. 60 Rule 10a-1(a)(1) provides that, subject to certain exceptions, an exchange-listed security may be sold short: (i) at a price above the price at which the immediately preceding sale was effected (plus tick), or (ii) at the last sale price if it is higher than the last different price (zero-plus tick). 61 Conversely, short sales are not permitted on minus ticks or zero-minus ticks, subject to narrow exceptions. 62 This is often referred to as the "tick test." The NASD's rules prohibit short selling National Market System ("NMS") stocks at or below the current best (inside) bid when the current (inside) bid