The Investment Company Institute is asking the Securities and Exchange Commission to not enforce its new short sale disclosure rules until after the agency provides additional compliance guidance.
The SEC in October 2023 finalized rules to require certain institutional investment managers to report short sale-related data to the SEC within 14 calendar days after the end of each month. The agency would then publish such data, on a slightly delayed basis, aggregating by security and keeping manager information confidential.
A separate rule mandates that parties to securities lending transactions disclose specific information on those transactions to the Financial Industry Regulatory Authority by the end of the day the loan is in effect or modified. FINRA is then required to make certain information it receives public by the morning of the next business day, according to an SEC fact sheet.
ICI in a Jan. 21 letter to David H. Saltiel, acting director of the SEC’s trading and markets division, said the need for enforcement relief is urgent because the first disclosures under the new rules are due Feb. 14.
“Given the commission’s lack of engagement with institutional investment managers to provide necessary reporting and interpretive guidance, institutional investment managers and other market participants have been left to make their own judgments on how to comply, and how to design their systems to comply, with Rule 13f-2 and the Form SHO reporting requirements,” ICI said in its letter.
An SEC spokesperson declined to comment.
In December 2023, the Managed Funds Association, National Association of Private Fund Managers and Alternative Investment Management Association challenged the rules in federal court, arguing that the SEC disregarded the interconnected nature of the rules and took a contradictory approach to regulating interrelated markets.
With the change in administration Jan. 20, SEC Commissioner Mark T. Uyeda, a Republican, is now acting chair. Uyeda voted against finalizing both rules in October 2023.