sec.gov
SECURITIES AND EXCHANGE COMMISSION
17 CFR PARTS 240, 241 and 242
[Release No. 34-50103; File No. S7-23-03]
RIN 3235-AJ00
SHORT SALES
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; Interpretation.
SUMMARY: The Securities and Exchange Commission
("Commission") is adopting new Regulation SHO, under the Securities Exchange Act of 1934 ("Exchange Act"). Regulation SHO defines ownership of securities, specifies aggregation of long and short positions, and requires broker-dealers to mark sales in all equity securities "long," "short," or "short exempt." Regulation SHO also includes a temporary rule that establishes procedures for the Commission to suspend temporarily the operation of the current "tick" test and any short sale price test of any exchange or national securities association, for specified securities. Regulation SHO also requires short sellers in all equity securities to locate securities to borrow before selling, and also imposes additional delivery requirements on broker-dealers for securities in which a substantial number of failures to deliver have occurred. The Commission is also adopting amendments that remove the shelf offering exception, and issuing interpretive guidance addressing sham transactions designed to evade Regulation M.
The Commission is deferring consideration of the proposal to replace the current "tick" test with a new uniform bid test restricting short sales to a price above the consolidated best bid, and also deferring consideration of the proposed exceptions to the uniform bid test. The Commission will reconsider any further action on these proposals after the completion of the pilot established by Regulation SHO.
DATES: Effective Date: September 7, 2004, except Part 241 will be effective August 6, 2004, and §242.202T will be effective from September 7, 2004 to September 7, 2007.
Compliance Date: The compliance date for §§242.200 and 203 is January 3, 2005. The compliance date for §242.202T is the same as its effective date, September 7, 2004.
FOR FURTHER INFORMATION CONTACT: Any of the following attorneys in the Office of Trading Practices, Division of Market Regulation, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-1001, at (202) 942-0772: James Brigagliano, Assistant Director, Lillian Hagen, Alexandra Albright, and Elizabeth Sandoe, Special Counsels, or Peter Chepucavage, Attorney Fellow.
SUPPLEMENTARY INFORMATION: The Commission is adopting Rules 200, 202T, and 203 of Regulation SHO1 and amending Rule 105 of Regulation M,2 and Rule 10a-13 under the Exchange Act. |
