The Securities and Exchange Commission will delay the compliance deadline for its short-sale disclosure rules for one year.
The rules’ initial compliance date was slated for Feb. 14, but the SEC on Feb. 7 announced a temporary exemption that will postpone that date to February 2026.
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.
The exemption provides industry participants sufficient time to work with SEC staff to address any outstanding operational and compliance questions and give filers sufficient time to complete implementation of system builds and testing, the SEC said.
Multiple industry groups have requested additional time to comply with the rule.
“It is important that data collected by the commission is accurate, complete and helpful to the market,” SEC acting Chairman Mark Uyeda said in a news release. “This exemption gives filers more time to implement the technical updates required for compliance according to standards that were released only on Dec. 16, 2024, immediately prior to the holidays. Regardless of this exemption, abusive naked short selling as part of a manipulative scheme remains unlawful, and the commission will use its regulatory tools to combat such illegal activity.”
Uyeda voted against finalizing the rules in October 2023.
Separately, several trade groups in December filed a lawsuit against the SEC seeking to overturn the rules, which they argue are contradictory and overstep the SEC’s statutory authority.
Bryan Corbett, president and CEO of the Managed Funds Association — one of the groups that filed the December lawsuit — said in a statement that granting relief will give alternative asset managers appropriate time to build new systems, test them, and receive interpretive guidance from SEC staff on outstanding compliance questions.
“By engaging thoughtfully with MFA on the unnecessarily rushed implementation timeline, the SEC is turning the page on the antagonistic relationship the previous chair had with the industry,” Corbett said, referencing former SEC Chair Gary Gensler. “This will result in more effective rulemakings that better protect markets and investors while not harming innovation or economic growth.”
