SEC tightens rules to check short selling by big investors
18 Sep 2008
Mumbai: The US Securities and Exchange Commission has proposed that big investors, including hedge funds, report their short positions on a daily basis even as the stock markets plummeted for another day.
SEC chairman Christopher Cox asked big investors to publicly disclose their short-sale positions daily and said the market regulator plans to inspect the funds' records.
SEC, he said, would also be looking at ''past trading positions in specific securities."
The rule ''will be designed to ensure transparency in short selling,'' Cox said, adding, ''Managers with more than $100 million invested in securities would be required to promptly begin public reporting of their daily short positions. The managers currently report their long positions to the SEC.''
SEC hopes that the new rules would discourage at least some investors from short-selling stocks.
Short sale refers to an investor borrowing stock, usually from a brokerages, and selling it, expecting the market price to decline.
