US regulator the Securities and Exchange Commission (SEC) has called for public comment on proposals to increase disclosure of short-selling positions.
The SEC has launched a study into the feasibility, benefits, and costs of requiring reporting of short sale positions of listed securities, and of conducting a voluntary pilot program in which public companies would agree to have all trades of their shares marked as either long, short, market maker short, buy, or buy-to-cover. The proposals would require positions to be reported in real time through the US consolidated tape.
Section 417 of the Dodd-Frank Act directs the SEC's Division of Risk, Strategy and Financial Innovation to study two short sale disclosure regimes. A transactions reporting regime would add short sale-related marks to the consolidated tape in a voluntary pilot program. A position-reporting regime would entail real-time reporting of investors' short positions either to the public or to regulators only.
The study will be based on feedback to 23 questions set out by Elizabeth Murphy, secretary of the SEC. These cover three areas: the current use of data around short selling and the degree to which shorting is used legitimately/illegitimately; position reporting, its feasibility and the introduction of a reporting threshold; and the practicalities, benefits and possible consequences of introducing transaction reporting.
Feedback must be submitted by early July, with the SEC required to submit a report on the study to Congress by 21 July.