The Securities and Exchange Commission has issued new rules about short selling, a strategy investors employ when they think a security’s price is going to fall. The two new rules don’t restrict short selling and won’t affect individuals or “short” or “ultrashort” exchange traded funds, at least not yet. The SEC plans an industry roundtable in September to discuss other proposals that could limit the practice, which has come under scrutiny after criticism that it drives down stock prices. Short and ultrashort (read: “leveraged”) exchange-traded funds allow… Read More
The Securities and Exchange Commission has issued new rules about short selling, a strategy investors employ when they think a security’s price is going to fall. The two new rules don’t restrict short selling and won’t affect individuals or “short” or “ultrashort” exchange traded funds, at least not yet. The SEC plans an industry roundtable in September to discuss other proposals that could limit the practice, which has come under scrutiny after criticism that it drives down stock prices. Short and ultrashort (read: “leveraged”) exchange-traded funds allow an investor to bet on a price drop. The funds are popular because they can be held in a typical brokerage account rather than transacted through a margin account, the vehicle through which short sales typically take place. One new rule calls for more reporting of short sales to increase the amount of information available to the public. Wall Street’s self-regulatory agencies will publish daily short-sale transaction reports that detail the total number of a company’s shares were shorted. After a month, the data would be… Read More