SEC Proposes Short Sale Data Reporting by Institutional Investment Managers

On February 25, 2022, the SEC proposed a brand new rule and kind requiring sure institutional funding managers to file confidential month-to-month stories with the SEC concerning brief sale knowledge. As proposed, the SEC would then publish sure combination info on giant brief positions associated to particular person fairness securities and web exercise in the course of the relevant month. This info is meant to complement the present brief sale transaction info offered by main U.S. inventory exchanges and FINRA.

Particularly, proposed Rule 13f-2 below the Securities Trade Act would require institutional funding managers to file new Kind SHO with the SEC confidentially, inside 14 calendar days after the top of every calendar month, with regard to every fairness safety and all accounts over which the supervisor meets or exceeds one of many thresholds described beneath. The particular threshold would rely on whether or not the brief place pertains to an fairness safety of a reporting or non-reporting entity (i.e., whether or not the issuer is required to file stories pursuant to the

Trade Act), as follows:

  • With respect to an fairness safety of a reporting issuer, a supervisor would file Kind SHO to report every “gross short position” over which it and any particular person below the supervisor’s management has funding discretion collectively that (1) has a worth of no less than $10 million on the shut of any settlement date in the course of the calendar month, or (2) represents a month-to-month common gross brief place as a proportion of shares excellent within the fairness safety of no less than 2.5%.

  • For an fairness safety of a non-reporting issuer, disclosure can be required of every brief place with a worth that meets or exceeds $500,000 on the shut of any settlement date in the course of the month.

The data an institutional funding supervisor would
report would come with:

  • the identify of the eligible safety;

  • finish of month gross brief place info; and

  • each day buying and selling exercise that impacts a supervisor’s reported gross brief place for every settlement date in the course of the calendar month reporting interval.

A supervisor would wish to find out whether or not it has a Kind SHO submitting requirement on a month-by-month foundation.

As proposed, one month after the top of every calendar month, the SEC would publish the next combination brief place info concerning every particular person fairness safety reported by managers on Kind SHO:

  • the combination gross place as of the calendar month’s final settlement date;

  • the combination gross brief place’s greenback worth;

  • a abstract of the managers’ reported hedging info with respect to the reported fairness safety;

  • the share of the combination gross brief place for a reported fairness safety that’s reported as being absolutely hedged, partially hedged or not hedged; and

  • the “net” exercise within the reported fairness safety for every particular person settlement date in the course of the calendar month.

Feedback on the proposal are due by April 26, 2022.

The SEC’s proposing launch is obtainable here.

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