SEC proposes rules for more disclosure from short sellers
New rules aim to enhance regulators’ understanding of market events, agency says
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WASHINGTON—Investors who make big bets against company stocks could soon have to report more information about their positions to the Securities and Exchange Commission.
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The SEC proposed rules Friday aiming to increase transparency around "short selling," whereby traders borrow company shares and then sell them in hopes of buying the stocks back at a lower price in the future. The commissioners, three Democrats and one Republican, voted unanimously in favor of the plan. The rules could be finalized after the agency receives and analyzes feedback from the public.
Under the proposed rules, market participants that hold large short positions in stocks would be required to report those positions and related short-sale activity to the SEC on a monthly basis. The agency would then aggregate and publish that data for each security, while keeping the identities of money managers and individual short positions confidential.
The U.S. Securities and Exchange Commission (SEC) proposed rules Friday aiming to increase transparency around "short selling," whereby traders borrow company shares and then sell them in hopes of buying the stocks back at a lower price in the future (Photographer: Andrew Harrer/Bloomberg / Getty Images)
"The raw data reported to the Commission…would help us to better oversee the markets and understand the role short selling may play in market events," SEC Chairman Gary Gensler said. Mr. Gensler was nominated by President Biden.
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Friday’s proposal comes as regulators continue to grapple with the implications of the January 2021 trading frenzy in GameStop Corp. and other so-called meme stocks.
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