SEC Final Rule: Short Sales & Investment Managers

The long story, short is….

• This rule applies to institutional investment managers that meet or exceed certain specified reporting thresholds are required to report

• There are new short sale reporting requirements under new Rule 13f-2 and new Form SHO

• Under the rule the SEC will aggregate data and publish it in an effort to increase market transparency, which is intended to fill an existing data gap

The Securities and Exchange Commission (“Commission”) is adopting new Rule 13f-2 and new Form SHO pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”).

The new rule and related form are designed to provide greater transparency through the publication of short sale-related data to investors and other market participants.

Under the new rule, institutional investment managers that meet or exceed certain specified reporting thresholds are required to report, on a monthly basis using the related form, specified short position data and short activity data for equity securities.

In addition, the Commission is adopting an amendment to the national market system (“NMS”) plan governing the consolidated audit trail (“CAT”) created pursuant to the Exchange Act to require the reporting of reliance on the bona fide market making exception in the Commission’s short sale rules. The Commission is publishing the text of the amendments to the NMS plan governing the CAT (“CAT NMS Plan”) in a separate notice.

Reference: https://www.sec.gov/files/rules/final/2023/34-98738.pdf