SEC adopts rule to increase transparency in short selling, where short sellers are forced to report deals

The SEC adopted rules Oct. 13 that require increased disclosure from institutional short sellers and make public certain information in the securities lending market.

In a 3-2 vote, with both Republican commissioners voting no, the SEC adopted a rule requiring institutional investment managers to report certain short sale-related data to the SEC within 14 calendar days at the end of each month, according to an SEC fact sheet.

The SEC would then publish such data, aggregated by security and with manager information kept confidential.

Institutional investment managers subject to the proposed changes are those with a short position of at least $10 million, or at least 2.5% of shares outstanding, and money managers with a short position of at least $500,000 in a non-reporting issuer equity security, the SEC said.

SEC Chair Gary Gensler said the rule comes as a result of a congressional mandate, directing the SEC to enhance transparency of short sale activity.

"This rule addresses Congress's mandate and improves upon existing sources of short sale-related data in the equity markets," he said in a news release.