10c-1a vs. 13f-2

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• 10c-1a vs. 13f-2

10c-1a vs. 13f-2

Status: SEC APPROVED RULES 2.1.25 Last Updated: 02 Jan 2025

Mainly the concern is on the reporting of the data. Short sales not daily but lending daily when 95% of loans are locates to cover shorts.

Core Issue: The two below rules treat disclosure of the same underlying market activity (short selling) in completely opposite ways, despite securities lending transactions serving as proxies for short sales.

Contradictory Disclosure Philosophy:

Rule 13f-2 Approach

• The SEC concluded that publicly disclosing short sales can substantially harm markets and investors by:

  • Revealing short sellers’ investment strategies

  • Increasing threat of retaliation against short sellers

  • Solution: Aggregated and delayed disclosure only

  • 13F2 involves the reporting of short sale information.

    • Aggregate and net activity will be publicly disseminated.

      • The industry raised concerns about:

        • 1. duplicative reporting obligations on short sale and securities lending data.

        • 2. the combined transparency could expose proprietary trading strategies (which could lead to frontrunning and impact markets).

  • The Short Interest Reporting Rule (Rule 13f-2), also adopted under the Dodd-Frank Act, requires institutional investment managers to report monthly short sale data to the SEC through the EDGAR system.

  • For the Short Sale Rule, compliance is delayed until February 2026.

Rule 10c-1a Approach

• The SEC took the exact opposite approach, requiring:

  • Publication of granular detail reflecting short-sale activity

  • Transaction-by-transaction disclosure

  • Next-day publication timeline

• Result: Detailed, near-real-time disclosure

  •  It was also argued that there was no comprehensive cumulative economic impact analysis.