The US Securities and Exchange Commission (SEC) adopted two final rules that establish new reporting requirements for both short sales (10c-1) and securities loans (13f-2).
Commenting on 10c-1 in a statement, Jack Inglis, chief exec of the Alternative Investment Management Association (AIMA) said: “It is disappointing the SEC included the requirement to report on the “retail” segment of the securities lending market, which includes transactions between dealers and their hedge fund clients. As a result, loans used to facilitate short sales will be reported to FINRA and some of that loan-level data will be disclosed to the public. This disclosure is another regulatory intervention that will not aid efficiency but likely impede short selling activity, disincentivize fundamental research and thus harm markets.”
Related to 13f-2, he said in a statement: “We welcome the SEC decision not to force the public disclosure of individual fund short positions to the market. We know from the EU experience that this significantly limits implementation of long/short strategies and therefore curtails market liquidity. Providing a higher quality of aggregate data on short interest to the market instead is the best way to address the need for adequate transparency. However, we do not believe the extensive reporting of even the smallest variations of short positions to the SEC is warranted and will result in unnecessary operational burden as well as risk data leakage.”