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ARTICLE · 19 SEPTEMBER 2008

New Emergency Short Sale Rules Effective September 18, 2008

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The SEC has issued new rules to limit "naked" short selling abuses. Through the use of an emergency order, the SEC has adopted temporary Rule 204T and previously proposed Rule 10b-21.

United StatesFinance and Banking
Henry Bregstein
Henry Bregstein
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The SEC has issued new rules to limit "naked" short selling abuses. Through the use of an emergency order, the SEC has adopted temporary Rule 204T and previously proposed Rule 10b-21. Additionally, the SEC passed a previously proposed rule that eliminates the existing options market maker exception from the current Regulation SHO close-out requirement. All of these rules came into effect at 12:01 a.m. (EST) on September 18, 2008.

Rule 204T: Hard Close-Out Requirements

Rule 204T applies to every participant of a registered clearing agency ("Clearing Firms") and each broker-dealer from which such participant receives trades for clearance and settlement ("Introducing Brokers"). Rule 204T expires at 11:59 p.m. (EST) on October 1, 2008.

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