US SEC Once Again Delays Controversial Short Selling Disclosure Rule Implementation Deadline

According to sources, the US Securities and Exchange Commission (SEC) has postponed for the second time the deadline for the implementation of the highly anticipated short selling and related securities lending disclosure rules. As per the SEC's directive, the final deadline for large investment management institutions (including hedge funds) to comply with the short selling reporting requirements has been extended to January 2, 2028, while the disclosure obligations for securities lending transactions have been postponed to September 28, 2028.

The SEC stated that the temporary exemptions are in the public interest and align with the goal of investor protection. In October 2023, the SEC introduced new rules requiring eligible asset management institutions to report short positions monthly, while pension funds, banks, and institutional investors lending their shares must submit reports on the next trading day.

In August, the US Fifth Circuit Court of Appeals ruled that the SEC failed to adequately assess the economic impact of the rules and ordered the agency to reconsider. The SEC's sole Democratic commissioner, Allison Herren Lee, stated, 'We are using compliance date extensions as a cover to mask a new trend: continuously distorting rules until they become ineffective, eroding the foundation of the rule of law.'

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