Synopsis: On July 27, 2009, the SEC announced important changes with respect to regulation of short sales including its decision to (i) make interim final temporary Rule 204T permanent, (ii) allow Form SH to expire, and (iii) curtail abusive “naked” short selling by making certain information available to the public through SRO reporting. The new Rule 204 requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. Additionally, in lieu of making Form SH permanent, the SEC has indicated that it is working with SROs to make available to the public daily publication of short sale volume information, disclosure of short sale transaction information, and twice monthly disclosure of fails to deliver data. The SEC's press release is available here.

Status: Rule 204 became final effective July 31, 2009. The SEC is also continuing to actively consider proposals on a short sale price test, circuit breaker restrictions and additional measures to enhance market quality and transparency. The SEC will hold a public roundtable on September 30, 2009, to solicit the views of financial market participants regarding a variety of trading and market related practices.