On October 13, 2023, the U.S. Securities and Exchange Commission adopted a final rule that will require institutional investment managers that meet or exceed a specified threshold to report monthly, using new Form SHO, specified short position data and short activity data for equity securities.  The final rule does not adopt the proposed “buy to cover” order marking requirement for broker-dealers, but it does adopt an amendment to the Consolidated Audit Trail (CAT) to require CAT reporting firms to report additional short sale data not currently required.

Pursuant to Rule 13f-2, a manager would be required to file Form SHO, via EDGAR, with the Commission within 14 calendar days after the end of each calendar month with regard to each equity security over which the manager and all accounts over which the manager has investment discretion collectively meet or exceed one of the below quantitative reporting thresholds.

1.  A manager will be required to file Form SHO with regard to any equity security of a reporting company issuer in which the manager meets or exceeds either: (i) 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 (ii) a monthly daily gross short position at the close of regular trading hours as a percentage of shares outstanding in the equity security of 2.5 percent or more.
2.  A manager will be required to file Form SHO with regard to any equity security of a non-reporting company issuer in which the manager meets or exceeds 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.

Form SHO includes two tables.  On Table 1, the manager will report information on the issuer's security, the number of shares of the reported quity security that represents the manager's gross short position at the close of the last settlement date of the calendar month reporting period, as well as the corresponding U.S. dollar value of this reported gross short position.  On Table 2, among other things, managers will report the "net" activity in the reported equity security. 

The final rule does not adopt proposed Rule 205 that would establish a new “buy to cover” order marking requirement for certain purchase orders effected by a broker-dealer for its own account or the account of another person at the broker-dealer.  The final rule adopts an amendment to the CAT NMS Plan that  will require CAT reporting firms to report to the CAT, for the original receipt or origination of an order to sell an equity security, whether the order is a short sale effected by a market maker in connection with bona fide market making activities in the equity security for which the bona fide market making exception

AIMA's summary of the final rule can be accessed here, and its enhanced summary of Rule 13f-2, which includes practical implications for both U.S. and non-U.S. managers.

On February 7, 2025, the SEC announced that was providing a temporary exemption from compliance with Rule 13f-2 and the filing of Form SHO.  The exemption ends January 2, 2026; accordingly, first Form SHO reports will be due Feburary 17, 2026 for Janaury 2026 positions and activity. 

Please contact Adam Jacobs-Dean or Daniel Austin with any questions regarding these proposals.

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  Adam Jacobs-Dean

  Managing Director, Global Head of Markets, Governance and Innovation

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  Daniel Austin

  Head of U.S. Markets Policy and Regulation