Exemption From Exchange Act Rule 13f-2 and Related Form SHO

Temporary Exemption from SEC Rule 13f-2 Compliance

The Securities and Exchange Commission (SEC) has announced a temporary exemption from compliance with Rule 13f-2 under the Securities Exchange Act and Form SHO reporting requirements. Due to this exemption, institutional investment managers meeting specific thresholds must now submit their initial Form SHO reports by February 17, 2026, covering the January 2026 reporting period.

Initially, Rule 13f-2 and Form SHO became effective on January 2, 2024, with a compliance deadline of January 2, 2025. The original due date for initial Form SHO filings was February 14, 2025, but the exemption extends the deadline by a full year.

Requirements Under Rule 13f-2 and Form SHO

Rule 13f-2 mandates that institutional investment managers surpassing specific reporting thresholds must submit Form SHO filings within 14 calendar days after the end of each month. These filings must be submitted via the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) System.

The SEC will publicly disclose aggregated data related to each equity security reported by institutional investment managers. These disclosures aim to improve transparency in the market, offering investors more insight into short-selling activities.

SEC’s Rationale for Granting the Exemption

SEC Acting Chairman Mark Uyeda emphasized the importance of ensuring that data collected by the Commission is accurate, complete, and beneficial to market participants. Uyeda stated that the exemption provides institutional filers more time to adopt the necessary technical updates that were finalized and released on December 16, 2024, just before the holiday season.

Despite the extended deadline, Uyeda reaffirmed that manipulative practices, such as abusive naked short selling, remain illegal. The SEC remains committed to enforcing anti-manipulation regulations and using regulatory tools to detect and penalize violations.

Impact on Industry Participants and Compliance Efforts

This temporary exemption offers institutional filers additional time to:

• Collaborate with SEC staff to resolve outstanding compliance and operational concerns.
• Implement necessary system upgrades and conduct thorough testing before compliance begins.
• Ensure accuracy in short-sale reporting and regulatory filings.

By extending the compliance deadline, the SEC aims to reduce operational burdens and enhance reporting accuracy, ultimately improving the quality of data available to investors.

Enhanced Transparency in Short Sale Reporting

Transparency plays a critical role in maintaining efficient financial markets. The SEC has consistently emphasized the importance of providing greater disclosure on short-selling activities to enhance market integrity.

Under Rule 13f-2, Form SHO reporting is expected to increase transparency regarding short sale-related data, supplementing the information already available through self-regulatory organizations (SROs).

Current Short Sale Data Provided by Self-Regulatory Organizations

Currently, several SROs publish daily short-selling volume statistics on their websites, offering insight into short-selling activity for individual equity securities. Additional short-selling data provided by SROs includes:

• Monthly statistics on short interest for exchange-traded securities.
• One-month delayed disclosures of individual short-sale transactions in listed securities.
• Hyperlinks to SRO-published short sale reports for easy access.

Furthermore, the SEC itself releases failures-to-deliver data for all equity securities, regardless of fail levels, twice a month. This reporting aims to help market participants monitor trends and identify potential short-selling abuses.

Conclusion

The SEC’s decision to provide a temporary exemption from Rule 13f-2 compliance and Form SHO reporting reflects its commitment to ensuring an orderly transition for institutional investment managers. By extending the deadline, the SEC allows market participants to refine their compliance systems, ensuring accurate and reliable short-selling data. Meanwhile, the agency remains vigilant in its enforcement actions against manipulative trading practices, reinforcing investor confidence in the financial markets.

SEC Press Release