UPDATE: SEC Wed Meeting On Soft Dollars, Delivery Failures
(Updates with detail on proposals to amend Regulation SHO, starting in the third paragraph.)
WASHINGTON -(Dow Jones)- The Securities and Exchange Commission announced it will meet Wednesday to vote on whether to issue an interpretive release on "soft-dollar" transactions.
The SEC issued the release for public comment last fall. If approved, it would provide updated guidance on soft-dollar arrangements in which money managers pay above-average brokerage commissions in exchange for receiving research or other materials.
At the same open meeting, the SEC said it will consider whether to propose amendments to Regulation SHO, a package of rules on short-selling. One change being eyed would be aimed at reducing delivery failures by revisiting an exception for options market-makers and a "grandfather" clause that shielded older delivery failures from corrective action to close out the position.
A second change would affect an exception for unwinding net short index-arbitrage positions, which isn't allowed if the stock market declined by 2% or more from the prior day's close. The SEC will consider whether to change the market-decline limitation index from the Dow Jones Industrial Average to the New York Composite Index.
Short sellers sell borrowed shares, which are supposed to be delivered within two days of settlement, but critics say the stock-borrow system doesn't work well, evidenced by instances where short sellers don't borrow shares, or cannot obtain them to borrow. Regulation SHO, adopted by the SEC in 2004, sought to liberalize some older restrictions on short-selling while cracking down on abuses such as "naked" short-selling, in which shares aren't borrowed, and delivery failures.
-By Judith Burns, Dow Jones Newswires; 202-862-6692; judith.burns@dowjones.com
- 07/07/2006 | 00:02 - |
