Today, the SEC announced several steps, designed to curtail abusive short sales, including making permanent previously temporary rules and announcing new regulatory efforts.
First, the Commission has made permanent Rule 204T, the interim final temporary rule issued last fall and set to expire on July 31, 2009. The new rule, Rule 204, requires that short sellers deliver securities by the settlement date, or, in the case of a fail to deliver, the broker-dealer must purchase or borrow shares to close out the short-sale by no later than the beginning of the trading on the day after the first fail to deliver occurs (T+4).
Second, the SEC’s staff and the Commission have continued to work with several self-regulatory organizations (SROs) to make short sale data publicly available through the SROs’ websites. Specifically the Commission and staff are looking to provide the daily publication of short sale volume per security, a report on each short sale transaction on a one-month delay, and twice monthly disclosure of fails to deliver. The availability of this information would result in a significant increase in the public availability of such data, as the current temporary rule requires non-public disclosure by institutional investment advisors with positions in excess of $10 million and is set to expire on August 1, 2009.
Finally, the SEC announced a public roundtable to discuss “securities lending, pre-borrowing, and possible additional short sale disclosures,” to be held on September 30, 2009. This roundtable follows an earlier roundtable in May.
In addition to these measures, the SEC continues to receive comments on competing proposed regulations that would impose various forms of a price-test on short sales.