Daily Management Review

SEC introduces new rules to increase transparency of stock market short selling


10/17/2023


The U.S. Securities and Exchange Commission (SEC) unveiled new regulations with the goal of enhancing "short selling" transparency in the stock market, reports CNBC.



Daniel Foster
Daniel Foster
An investor that engages in a "short sale" borrows shares, sells them, and then watches for a decline in quotes to purchase stocks at a reduced price, so profiting. But if quotes increase, the investor may lose all of their money.

S3 Partners calculated the value of the U.S. "shorts" market to be $927 billion as of Thursday.

According to the SEC's new regulations, businesses that lend shares must report them to the Financial Institutions Regulatory Authority (FINRA), and investors must provide information about their short positions to the commission.

The SEC first proposed disclosure guidelines for securities lending in late 2021 and early 2022.

source: cnbc.com