US hedge funds, brokers and exchanges have issued a warning to regulator the Securities and Exchange Commission that a decision to re-introduce a controversial curb on short selling at a meeting tomorrow will have a detrimental impact on liquidity.

The US equities regulator meets tomorrow to consider the re-instatement of the "uptick rule", a requirement that short sellers wait until a stock price increases before they can buy stock and complete the short sale, following calls from US authorities to tighten controls on short selling.