SEC Adopts T+4 Cover for Short Sales; Drops Some Reporting Requirements
The SEC has finalized temporary rules that require a clearing firm to close out a “fail to deliver” resulting from a short sale within 4 days of the fail. The SEC also dropped Rule 10a-3T, which had required short sellers to provide trading information to the SEC. Instead, the SEC is working towards making aggregate short sale information available to the public on a delayed basis.
OUR TAKE: The SEC has stopped demonizing short sellers. In fact, the SEC’s press release explains how short selling can help the market by contributing to price discovery, mitigating market bubbles, increasing liquidity, promoting capital formation, facilitating hedging and risk management, and limiting upward market manipulation.