SEC Issues Final Rule on Short Selling

The SEC has released a final rule that adds a new rule to the Securities Exchange Act of 1934 (Rule 13f-2) in an effort to increase the transparency of equity market data about short selling. The final rule, which is being issued in response to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, “will require institutional investment managers that meet or exceed certain thresholds to report on Form SHO specified short position data and short activity data for equity securities.”

In a related rulemaking item, the Commission has also amended the national market system plan governing the consolidated audit trail (CAT). This amendment “will require each CAT reporting firm that is reporting short sales to indicate when it is asserting use of the bona fide market making exception in Rule 203(b)(2)(iii) of Regulation SHO.”

The final rule, the CAT-related amendment, and Form SHO will become effective 60 days after the date of the final rule’s publication in the Federal Register. For more information, see the press release and fact sheet — as well as the statements by SEC Chair Gary Gensler and Commissioners Caroline Crenshaw, Jaime Lizárraga, Hester Peirce, and Mark Uyeda — on the SEC’s Web site.