SEC Adopts New Rule 13f-2 to Enhance Short Sale Transparency

The Securities and Exchange Commission today adopted two new rules, Rule 13f-2 and an amendment to the National Market System Plan (NMS Plan) governing the Consolidated Audit Trail (CAT), in order to provide greater transparency to investors and other market participants regarding short sale-related data. Rule 13f-2 will require institutional investment managers with particular thresholds to report on Form SHO specified short position data and short activity data for equity securities, which the SEC will then aggregate and make publicly available on EDGAR with a delay. Furthermore, the amendment to the CAT NMS Plan will require each CAT reporting firm that is reporting short sales to indicate when it is asserting use of the bona fide market making exception. The new rules and respective forms become effective 60 days after publication of the Federal Register adopting release, with a compliance date of 12 months after the effective date for Rule 13f-2 and Form SHO, and 18 months after the effective date for the amendment to the CAT NMS Plan.