Wall Street’s main regulator is weighing whether to require more transparency of short selling and the opaque network of stock lending and borrowing that facilitates it, according to people familiar with the matter.
The Securities and Exchange Commission was ordered 11 years ago to impose such rules but never did it. Now, dealing with the fallout from frenetic trading in GameStop Corp. shares, the agency under new leadership is considering using its authority to shine more light on the mechanics of the bearish trades.
The 2010 Dodd Frank financial overhaul law required the SEC to collect information about how much of each public company’s stock has been sold short. The SEC doesn’t gather or disseminate data on such bets by specific investors.
House lawmakers meeting Thursday plan to examine the GameStop trading and discuss the dearth of short-sale data, according to a memorandum issued in advance of the hearing. The memo noted that the SEC hadn’t completed its responsibilities under the Dodd-Frank mandate.
It isn’t clear what specific disclosures the SEC would propose. Any new requirements would have to be issued first for public comment before commissioners could vote to adopt them.