On 1 May 2026, FINRA proposed to reform Reg SHO, fail-to-deliver reports.
- FINRA proposed amendments to improve usefulness of short selling information reported to/published by FINRA and improve oversight of compliance with Reg SHO.
- Adopt FINRA Rule 4321 (Allocations of fail to deliver positions); amend FINRA Rule 4560 (Short Selling reporting).
- Follows FINRA Regulatory Notice 21-19 in relation to position reporting.
Proposed Rule
- Propose to increase frequency, granularity of short selling information being reported.
- Require monthly report of daily allocations of Reg SHO Rule 204 fail to deliver positions
Short Selling Reporting
- Weekly reporting instead of twice monthly with submissions due one business day after the reporting date, after which FINRA would publish weekly.
- More granular reporting of certain positions tied to arranged financing transactions that FINRA argues reflect economic short interest and should be made publicly visible.
- Firms would be required to include in the report the final short positions for securities with deleted ticker symbols using the last valid settlement date.
- Explicitly would apply to OTC equity securities and exchange-listed equities, aligning the rule text with current operational practice.
Allocations of Fail-to-Deliver Positions (New Rule 4321)
- New Rule 4321 would require firms to report how fail-to-deliver (FTD) positions are allocated between clearing firms and correspondent firms under Reg SHO Rule 204.
- Firms to submit monthly reports containing daily allocation data to help FINRA monitor compliance with Reg SHO’s close-out requirements.
- Will also help detect potential abusive short selling or settlement practices, gain better visibility into which firms are effectively responsible for unresolved delivery failures.
Consultation
- Comments on proposed rule due 21 days after publication in the federal register.
