The SEC Adopts New Short Sale Reporting Requirements for Institutional Investment Managers

On October 13, 2023, the SEC adopted Rule 13f-2 which will require institutional investment managers (“Institutional Managers”) to report on new Form SHO specified short position data and short activity data for equity securities that exceed certain reporting thresholds described below (the “Reporting Thresholds”).  For purposes of Rule 13f-2, Institutional Managers means “any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person.” Pursuant to that definition, investment advisers, broker-dealers, family offices, corporations, insurance companies and pension funds that meet any one of the Reporting Thresholds will be required to file Form SHO. 

Reporting Thresholds 

Institutional Managers will be required to file Form SHO via EDGAR within 14 calendar days after the end of each month that they meet any of the following Reporting Thresholds: 

• With respect to any equity security that is of a class of securities that is registered pursuant to Section 12 of the Exchange Act or for which the issuer of that class of securities is required to file reports pursuant to Section 15(d) of the Exchange Act (a “Reporting Company Issuer”) over which the Institutional Manager and all accounts over which the Institutional Manager has investment discretion with respect to either: 
  • a monthly average of daily gross short positions at the close of regular trading hours in the equity security with a U.S. dollar value of $10 million or more, or 
  •  a monthly average of daily gross short positions at the close of regular trading hours as a percentage of shares outstanding in the equity security of 2.5 percent or more.
• With respect to any equity security that is of a class of securities of an issuer that is not a Reporting Company Issuer as described above (a “Non-Reporting Company”)  over which the Institutional Manager and all accounts over which the Institutional Manager has investment discretion  with respect to a gross short position in the equity security with a U.S. dollar value of $500,000 or more at the close of regular trading hours on any settlement date during the calendar month. Unlike the calculation for Reporting Company Issuers, the threshold for a Non-Reporting Company is triggered following a single day in which the short sale position exceeds $500,000.

The Instructions to Form SHO provide detailed instructions on how to calculate each of the Reporting Thresholds. 

Reporting Requirements 

For each reported equity security, Institutional Managers will be required to report on Form SHO their end-of-month gross short position in the equity security at the close of regular trading hours on the last settlement date of the calendar month; and for each individual settlement date during the calendar month, detailed information on the Institutional Manager’s “net” activity in the reported equity security, including  activity in derivatives, such as options. The SEC will publish aggregated information derived from the data reported on Form SHO within one month after the end of the reporting calendar month.

Compliance Date

Rule 13f-2 will become effective 60 days after publication of the adopting release in the Federal Register. The compliance date for Rule 13f-2 and Form SHO will be 12 months after the effective date of the adopting release, with public aggregated reporting to follow three months later.