The US Securities and Exchange Commission (SEC) has once again pushed back the compliance deadlines for its controversial short-sale and stock lending disclosure rules, meaning hedge funds and other large investors have several more years before its requirements take effect, according to a report by Bloomberg.
Under the revised timeline, investment managers will now have until 2 January 2028 to comply with the short-sale reporting rules, while stock lending disclosures have been delayed until 28 September 2028. The regulator said the temporary exemptions are “necessary in the public interest and consistent with the protection of investors”.
The rules, finalised in October 2023, would require certain managers to report short-sale activity on a monthly basis, while institutions that lend securities – including banks and pension funds – would need to report those transactions the following day. The framework was introduced amid heightened political and regulatory scrutiny of short selling following the 2008 financial crisis and the 2021 shorting of GameStop.
Industry bodies including the Managed Funds Association and the Alternative Investment Management Association previously challenged the rules in court, arguing that they were inconsistent and exceeded the SEC’s statutory authority. In August, a three-judge panel at the Fifth US Circuit Court of Appeals ruled that the SEC had failed to fully assess the economic impact of the measures and ordered the regulator to revisit them.
AIMA’s head of markets, governance and innovation, Adam Jacobs-Dean, said the latest delay would provide relief to market participants as the SEC determines its next steps. However, SEC commissioner Caroline Crenshaw criticised the move, arguing that it amounted to “repeal by extension”.
