The Securities Industry and Financial Markets Association (SIFMA) has called the Securities and Exchange Commission’s (SEC) amended order on its short-selling emergency order “essential.”
“These clarifications will help ensure the emergency order avoids market disruption and preserves liquidity, and instead targets rumor-mongers and others who unlawfully manipulate stock prices,” says Ira Hammerman, SIFMA senior managing director and general counsel. “SIFMA fully supports SEC enforcement action against individuals engaged in illegal market manipulation. The guidance is essential for separating legitimate market makers from those who may try to act illegally. We appreciate the SEC’s efforts to address investor and industry concerns since the announcement was made Tuesday.”
The amended order provides:
-An exception from the order’s pre-borrow requirement for market makers selling short in connection with bona-fide market making including stock market makers and specialists, options market makers and specialists, and block positioners. The settlement date delivery requirement still applies to these market makers.
– An exception for short sales of certain restricted securities (effected pursuant to Rule 144 of the Securities Act of 1933) to make the order consistent with Reg SHO which will facilitate orderly settlement.
– An exception for sales by an underwriter or any member of a syndicate participating in the listed securities.
A pdf of the emergency order is available on the SEC’s website.