Hedge funds will have to start sharing significantly more information about their short-sale transactions with the Securities and Exchange Commission, setting up another clash between the industry and Wall Street’s main regulator, Bloomberg News reported. The SEC finalized rules on Friday that require hedge funds and other big investors to report gross short positions in certain stocks at the end of each month, and details on related trading activity — including in derivatives — on a more regular basis. The agency would then aggregate positioning in equities across funds and publish that with a delay. Reporting will generally be triggered if a hedge fund reaches a $10 million average short position during the reporting month, or a 2.5% gross short position relative to total shares outstanding. The SEC did away with a reporting requirement tied to a potential daily trigger. “Given past market events, it’s important for the commission and the public to know more about short sale activity in the equity markets, especially in times of stress or volatility,” SEC Chair Gary Gensler said in a statement. Short selling has long been a fixture of the U.S. equity market, but the practice has grown more controversial. The SEC has faced pressure to increase scrutiny after retail traders banded together via social media in January 2021 and bought up shares in companies like GameStop Corp.
