On 27 October 2022, FINRA provided FAQs about short selling reporting.
- FINRA issued FAQs on short selling reporting requirements under FINRA Rule 4560.
- FAQs pertains to the reporting to FINRA of short positions in OTC Equity securities, as defined in FINRA Rule 6420, and securities listed on a national securities exchange.
Short Interest Reporting
- Specified when transactions must be reported as short interest pursuant to Rule 4560.
- Firms have an ongoing duty to report complete, accurate short interest information.
- Incomplete or inaccurate short interest reporting must be promptly disclosed to FINRA.
- Short interest information should only be reported to FINRA once; reporting by more than one firm results in the duplicative or over-reporting of short interest positions.
- Rule 4560 applies to positions in any equity security that has a US symbol, irrespective of where short selling is executed or whether the position is reflected on the firm’s books.
- Prime brokers must verify the nature of a position before reporting it as short interest.
- Required firms to only report short positions resulting from short saelling that has settled or reached settlement date by the close of the designated reporting settlement date.
- Further, Rule 4560 applies to short positions that are the result of ETF creation activity.
- Master/sub-account or parent/child account short position reporting process provided.
- The covered portion of a short position should not be reported as short interest.
- Where, as part of a strategy, an account holds both a short and long position in the same security simultaneously, the short position is reportable as short interest.