Pursuant to Section 417 of the Dodd-Frank Act, the SEC’s Division of Risk, Strategy and Financial Innovation is undertaking two current studies involving short selling. The first study focuses on the state of short selling on national securities exchanges and in the over-the-counter markets.
The SEC is seeking comments to complete its second study involving the examination of the feasibility, benefits, and costs of real-time reporting of short positions either to the public or solely to the SEC and FINRA and conducting a voluntary pilot program in which public companies will agree to have all trades of their shares designated as ‘‘short’’, ‘‘market maker short’’, ‘‘buy’’, ‘‘buy-to-cover’’, or ‘‘long’’, and reported in real time.
While short selling is used to benefit from a stock’s expected price decline, to provide liquidity, or to hedge risks, the SEC is seeking input on the existing uses of short selling and the adequacy of the available information regarding short sales. Short selling accounts for almost half of U.S. equities volume, the SEC said, based on data provided by exchanges for June 2010.
The comments are requested over a 45-day period as the agency is preparing its report to Congress mandated by the Dodd-Frank Act, with a deadline of July 21.
To view the request for public comments, click here.
To view comments submitted to date, click here.
To submit your own comment to the SEC, click here.