U.S. SEC again delays implementation of controversial short-selling disclosure rule

Mars Finance News: On December 4, the U.S. Securities and Exchange Commission (SEC) postponed for the second time the deadline for the highly anticipated short selling and related securities lending disclosure rules. According to SEC instructions, the final deadline for large investment management institutions (including hedge funds) to comply with short position reporting requirements has been extended to January 2, 2028. The disclosure obligations for securities lending transactions have been postponed to September 28, 2028. The SEC stated, “The Commission believes that these temporary exemptions serve the public interest and are consistent with the goals of investor protection.” In October 2023, the SEC introduced new regulations requiring qualifying asset management institutions to report short position data monthly. Pension funds, banks, and institutional investors that lend their held stocks must submit a report the day after the transaction. In August, the U.S. Fifth Circuit Court of Appeals ruled that the SEC had failed to adequately assess the economic impact when drafting the rules and required the agency to reconsider. The SEC’s only Democratic commissioner, Crenshaw, stated, “We are using compliance deadline extensions as a pretext to mask a new trend: continually distorting rules until they fail, which is eroding the foundation of the rule of law.” (Jin10)