On February 25, 2022, the Securities and Exchange Commission (“SEC”) voted to amend the Consolidated Audit Trail (“CAT”) and Regulation SHO, as well as to propose new rules that would require expansive short sale reporting. In a statement, SEC Chair Gary Gensler indicated that these proposals were important for the SEC to “address future market events, striking a balance between the need for transparency and the price discovery process.”
The reporting requirement would apply to:
- certain institutional investment managers who hold, in an equity security of a reporting issuer, a short position of at least $10 million or the equivalent of 2.5% or more of the total shares outstanding, or
- certain institutional investment managers who hold, in an equity security of a non-reporting issuer, a short position of at least $500,000.
Certain data would be published by the SEC on an aggregate basis about large short positions for individual equity securities. Chair Gensler said that publishing more comprehensive data would provide “more visibility into the behavior of large short sellers.”
Chair Gensler also noted in his statement that the SEC will reopen the comment period related to the SEC’s November 2021 Proposed Exchange Act Rule 10c-1, which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, like the Financial Industry Regulatory Authority (“FINRA”), who would then make the information public.
See Chair Gensler’s statement here.