New SEC short sale rules would force investors to submit updates each month

cnbc.com:

The Securities and Exchange Commission said Friday that it's considering a new rule and changes to existing regulations that would force short sellers to make more frequent disclosures about their bets.

Wall Street's top supervisor said the proposed changes would require institutional investors to collect and submit certain short sale data to the SEC each month. The commission would then make aggregate data about large short positions, including daily short sale activity, available to the public for each security.

When short selling, a trader who wants to bet against a company borrows shares of its stock and then sells them on the market. The trader will in theory buy those shares back at a lower price later and return them to the brokerage or asset manager that lent them the equity.

Asset managers lend those shares to short sellers in exchange for regular fees.

«I am pleased to support this proposal because, if adopted, it would strengthen transparency of an important area of our markets that would benefit from greater visibility and oversight,» SEC Chairman Gary Gensler said in a press release.

The proposed changes to Regulation SHO, a collection of SEC rules on short selling, would keep the identities of managers and individual short positions confidential.

Gensler noted in his remarks that the new rulemaking would apply to institutional managers who hold a short position of at least $10 million or the equivalent of 2.5% or more of the total shares outstanding.

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«It's important for the public and the Commission to know more about this important market, especially in times of stress or volatility,» he added. «The proposed rule would help the Commission address future market events,