In the wake of the 2008 financial crisis, Congress directed the SEC to enhance the transparency of short selling of equity securities. In particular, the Dodd-Frank Act included a new Exchange Act section, 13f-2, which mandated that the SEC write rules for institutional investment managers’ disclosures of their short selling-related data. Congress did so even though the Financial Industry Regulatory Authority (FINRA) already had been making some disclosures with regard to short sale transactions.

Separately, since 1978, investment managers have had to report their long positions quarterly on so-called 13f filings. When Congress in Dodd-Frank mandated that the SEC write rules with regard to short selling disclosure, they did so by amending that same section, 13f. Congress, however, said that such reporting of short selling should be done monthly at a minimum.

Today, I’m pleased that, based upon public comment, we’re adopting a rule fulfilling that Congressional mandate. Today’s adoption will promote greater transparency about short selling both to regulators and the public. Investment managers will report to the Commission, and an aggregated, anonymized version of that information will be disclosed to the public.

Investment managers that carry large short positions in equity securities will be required, within two weeks after each month, to report those positions and related short sale activity to the Commission. The threshold for reporting will be met when an investment manager’s short position in a particular equity security of a reporting issuer is at least $10 million or the equivalent of 2.5 percent or more of the total shares outstanding on average during a month. The threshold for reporting short positions of equity securities of nonreporting issuers would be $500,000 on any given settlement day of the month.

Based upon public feedback, we made a number of changes from the proposal. The threshold of $10 million is based upon the average during the month, rather than on any given settlement day. Further, investment managers would not have to give the Commission as much detail as proposed regarding their daily short activity.

Based upon the filings to the Commission, the Commission will make public, within four weeks after the end of each month, aggregated, anonymized data about the gross, end-of-month large short positions. The Commission also will publish the net aggregated daily activity data for each settlement day.

This rule addresses Congress’s mandate and improves upon existing sources of short sale-related data in the equity markets. First, the rule is applicable to institutional investment managers, not just FINRA broker-dealer members. Second, the short sale data publicly disclosed on an aggregated basis will include the daily net activity on each settlement date during the calendar month. Such information not currently made available by FINRA or the exchanges. Third, it will disclose by category the directional short selling by managers as well as market makers and liquidity providers.

The final rules also address one of the four areas for identified by Commission staff in the Report on Equity and Options Market Structure Conditions in Early 2021, commonly known as the GameStop Report.[1]

Given past market events, it’s important for the Commission and the public to know more about short sale activity in the equity markets, especially in times of stress or volatility.

I’d like to thank members of the SEC staff for their work on these final rules, including:

• Haoxiang Zhu, David Saltiel, Andrea Orr, Carol McGee, Josephine Tao, Timothy M. Riley, Patrice Pitts, Jessica Kloss, Brendan McLeod, Roland Lindmayer, William Miller, David Bloom, Roni Bergoffen, Laura Compton, John Prochilo, Mark Donohue, David Hsu, Erika Berg, and Andrew Sherman in the Division of Trading and Markets;
• Jessica Wachter, Amy Edwards, Michael Walz, Benjamin Liebman, Andrew Glickman, Robert Girouard, Parhaum Hamidi, and Louis Craig in the Division of Economic and Risk Analysis;
• Donna Chambers, Melinda Hardy, Janice Mitnick, Meridith Mitchell, and Robert Teply in the Office of the General Counsel;
• Elizabeth Pflaum, Tina Barry, Ilan Felix, and John Polise in the Division of Examinations;
• Adam Large, Stephan Packs, and Anna Sandor in the Division of Investment Management;
• Jonathan Max Warner in the Division of Enforcement;
• Ted Yu and Adam Turk in the Division of Corporation Finance;
• Jane Patterson, Sylvia Pinkerton, and Todd Canali in the EDGAR Business Office; and
• Barbara Volpe, Naomi Perry, and Cakesha Hardin in the Office of the Secretary.