The Securities and Exchange Commission (SEC) has delayed its first-ever short-selling disclosure regime by one year, pushing Rule 13f-2’s initial reporting deadline to February 2026.
As a result of the exemption, filings on initial Form SHO reports from institutional investment managers that meet or exceed certain specified thresholds will be due by February 17, 2026, for the January 2026 reporting period.
The effective date for Rule 13f-2 and Form SHO was January 2, 2024, and the compliance date for such rule and form was January 2, 2025, with initial Form SHO filings originally due by February 14, 2025.
This development comes as the rule faces legal challenges that could potentially invalidate it entirely.
The delay highlights significant challenges investment managers face in preparing for these new requirements, particularly in data management and compliance workflows.
Scott Budlong, New York Attorney, Barnes & Thornburg, commented that by issuing the temporary exemptive order, the SEC recognized that it “hadn’t given managers enough time to internalize the Rule 13f-2 reporting requirements and to implement the tech adaptations needed to capture the relevant data”.
“Managers also will be hoping for SEC interpretive guidance about the scope of securities and transactions subject to reporting on Form SHO,” he told Traders Magazine.
For example, there is currently confusion about whether short sales of foreign equity securities effected outside the United States are in-scope or not, he said.
“It’s also worth remembering that various industry groups have brought litigation challenging the fundamental legal validity of the short reporting rules. That case is pending in the U.S. Court of Appeals for the Fifth Circuit,” Budlong added.
“Given the late modifications to the reporting specifications and lack of published guidance, it’s not surprising that the compliance date for the rule has been pushed back a year,” added Peter Gargone, Founder and CEO of n-Tier.
“However, even with the deadline extension, the language in the notice makes it clear that regulators remain highly focused on the overall completeness and accuracy of individual firms’ reporting. Firms should use this extra time to ensure their reporting is complete and accurate, with robust processes in place for ongoing monitoring and related compliance procedures,” he said.
Rule 13f-2 requires institutional investment managers that meet or exceed certain specified thresholds to file Form SHO with the Commission within 14 calendar days after the end of each calendar month with regard to certain equity securities via the Commission’s Electronic Data Gathering, Analysis, and Retrieval System (EDGAR).
The Commission will publish, on an aggregated basis, certain information regarding each equity security reported by institutional investment managers on Form SHO and filed with the Commission via EDGAR.
This exemption will provide industry participants sufficient time to work with Commission staff to address any outstanding operational and compliance questions, according to the SEC.
This exemption will also provide filers sufficient time to complete implementation of system builds and testing.
Transparency is essential to well-functioning markets, and the Commission has stated the importance of providing more disclosure about short selling. “It is also important to enhance the accuracy of the short sale-related data that would ultimately be provided to investors by giving institutional investment managers additional time,” the SEC said.
According to Greg Hotaling, Confluence Senior Regulatory Content Manager, the one-year delay gives institutional investment managers some breathing room – “good news for them, as some data gathering aspects of Rule 13f-2 were proving a real challenge”.
“They should take notice, however, that SEC Acting Chairman Mark Uyeda emphasized the importance of short selling transparency generally, and did express support for the new rule,” he said.
As the rule is also being contested in court, some uncertainty still lingers, Hotaling said.
“For managers, this shows how regulatory agility is essential, as they face a changing legal landscape. They need to remain nimble in their processes, developing compliance workflows that can adapt to change efficiently,” he said.
