Home Markets Wall Street body proposes new rules on short positions, stock loans

Wall Street body proposes new rules on short positions, stock loans

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Signage is seen outside of the Financial Industry Regulatory Authority (FINRA) offices in Manhattan, New York City, U.S., September 11, 2020. REUTERS/Andrew Kelly

The Financial Industry Regulatory Authority (FINRA), Wall Street’s self-regulatory body, has proposed changes to its short-interest reporting requirements in a bid to make information more useful.

The proposed changes to Rule 4560 would increase the frequency of short-interest reports from twice a month to weekly or even daily. The change would require clearing firms to report synthetic short exposure – bets made against shares via derivatives – in firm and customer accounts.

The move highlights intensifying scrutiny of short-selling, betting against shares to profit if they fall, amid ongoing volatility in “meme stocks.” These are driven by retail investors banding together to squeeze hedge funds that bet against GameStop(GME.N) AMC Entertainment Holdings Inc(AMC.N) and other stocks.

The changes…

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