The US Securities and Exchange Commission on Friday agreed to roll out new rules aimed at boosting transparency of short selling, the controversial practice of betting against stocks that drew new scrutiny amid the GameStop saga, reports Reuters.
First proposed in late 2021 and early 2022, the rules will require investors to report their short positions to the agency, and companies that lend out shares to report that activity to the Financial Industry Regulatory Authority (FINRA), a self-regulatory body that polices brokers.
Short selling involves borrowing a stock to sell it in the expectation the price will fall, then repurchasing the shares and pocketing the difference. Should the price rise, the seller can be exposed to potentially unlimited losses.
Short interest in the US market totaled $927 billion as of Thursday, according to analytics firm S3 Partners. The practice has long been divisive, with critics accusing short sellers of trying to hurt companies, and short sellers arguing they help root out fraud and corporate misconduct.
New US SEC rules to shine a light on short selling
FE Team | Published: October 14, 2023 21:33:38
New US SEC rules to shine a light on short selling
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