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  • Writer's pictureArjun Thirukonda

Enhancing Short Sale Disclosures: SEC Rule 13f-2 and Form SHO Reporting



The Securities and Exchange Commission (SEC) recently adopted a new Rule 13f-2, as well as an amendment to the NMS Plan which governs the consolidated audit trail (CAT).


  • New Rule 13f-2: Under the new rule, “managers” that meet or exceed certain specified reporting thresholds are required to report, on a monthly basis using Form SHO via EDGAR, specified short position data and short activity data for equity securities.

  • CAT NMS Plan Updates: CAT firms will indicate whether an order is a short sale effected by a market maker with bona fide market making activities


Compliance Dates


The final rules became effective on January 2, 2024 when it was published in the Federal Register.


The final rules provide a compliance period of twelve (12) months from the effective date for Rule 13f-2 and Form SHO and public aggregate reporting to follow three (3) months later. 


The compliance date for the CAT NMS Plan will be eighteen (18) months after the effective date. 

 

Form SHO Reporting Requirements:


Form SHO, under the new reporting regime of Rule 13f-2, is designed to provide greater transparency through the publication of short sale-related data to investors and other market participants. The new reporting regime of Rule 13f-2 provides disclosures that supplement the short sale-related information that currently is publicly available or accessible for a fee from existing short sale reporting regimes provided by some registered national securities exchanges (“exchanges”) and registered national securities associations (“RNSAs”).



Who needs to report?

Rule 13f–2 will require Managers as defined in section 13(f)(6)(A) of the Exchange Act, as an ‘‘Institutional investment manager’’ which includes any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion (as defined in Rule 13f-1(b)) with respect to the account of any other person. As such, the term ‘‘institutional investment manager’’ typically can include brokers and dealers, investment advisers, banks, insurance companies, pension funds and corporations.

What securities are in scope for Rule 13f-2 reporting?

What are the key reporting requirements and frequency of reporting?

What are the reporting thresholds?

What information does Form SHO require?

How can firms best ensure they comply with Rule 13f-2?



How can RegEdge assist you?


Our comprehensive knowledge of compliance reporting requirements, cross-jurisdictional trade and transaction reporting and other regulatory requirements allows RegEdge to assist clients in traversing the complex regulatory landscape (including SEC, CFTC, EMIR, MiFID II, SFTR, MAS, ASIC, HKMA, and JFSA) to not only achieve compliance but also improve efficiency and facilitate sound decision-making. RegEdge has recent experience helping clients with the implementation of 13f-2 related requirements such as Transparency Directive Amending Directive (TDAD) disclosures, US Shareholding Disclosures (13D, 13G), SEC Form 13F reporting and HK Disclosure of Interests (DOI).


  • Perform a detailed assessment of data requirements to enable the firm to be prepared for Form SHO reporting. Pinpoint critical areas where data is missing for short selling and positions, reference data, and required attributes. This includes gaps affecting aggregation methods, and identification of securities that fall under the rule's scope.

  • Assist with business analysis, data analysis, and program management for implementing Form SHO requirements, leveraging either in-house solutions or vendor offerings.

  • Offer comprehensive support for implementing Form SHO reporting requirements, guiding you through the entire process from business analysis and solution design to implementation and final regulatory submissions.


For a detailed set of services, visit us at https://www.regedge.com/all-services

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