SEC Votes on RegSHO Amendments & Proposals
SEC Votes To End Short-Selling 'Grandfather' Protections
June 13, 2007,By Judith Burns, Dow Jones Newswires
(I do not clickable link to DJ, but there is a longer article, with link, at bottom of this post.)
WASHINGTON (Dow Jones)--The Securities and Exchange Commission voted Wednesday to approve a change to tighten rules intended to curb manipulative short sales, including so-called "naked" short sales.
The change eliminates a controversial exception that shielded existing short positions from requirements to deliver hard-to-borrow shares within 13 days of settlement. Once the change takes effect, short positions previously protected by the grandfather clause must be closed out within 35 days.
SEC Chairman Christopher Cox said persistent failures to deliver shares sold short seem to be due to the grandfather protections, which the SEC included in 2004 to prevent stock-market volatility. Critics complained the protections undermined efforts to clean up abuses involving "naked" short sales.
Short selling involves sales of borrowed securities, producing profits when prices decline. The practice is legal, but the SEC's Regulation SHO sought to prevent "naked" short sales, in which short sellers don't borrow securities they sell.
SEC officials said delivery failures have declined about 35% overall since Regulation SHO took effect and have fallen about 53% for hard-to-borrow stocks defined as "threshold" securities.
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06/13/07: SEC Votes on Regulation SHO Amendments and Proposals; Also Votes to Eliminate "Tick" Test
ie SEC Votes To End Short-Selling 'Grandfather' Protections
media-newswire.com
Starts off:
... The Securities and Exchange Commission today voted to take additional steps to better safeguard investors and protect the integrity of the markets during short selling transactions by closing loopholes in Regulation SHO and further reducing persistent failures to deliver stock by the end of the standard three-day settlement period for trades.
Erik Sirri, Director of the SEC's Division of Market Regulation, said, "Today the Commission voted on steps to streamline and tighten short selling provisions so that markets and investors are better served by our rules."... |
