US SEC “will consider” short selling restrictions in coming weeks, Schapiro says

The US Securities and Exchange Commission (SEC) is to consider new curbs on the practice of short selling in the coming weeks, chairman Mary Schapiro revealed in a speech on Friday.

Speaking at SEC Speaks in Washington DC, Schapiro explained some of the SEC’s goals for the coming year as well as elaborating on the work it has completed over the past 12 months. The chairman only devoted three sentences to the subject of short selling, but they revealed that the practice is at the forefront of SEC planning.

“Finally, in the past year, we adopted rules that seek to reduce the potential for abusive ‘naked’ short selling in the securities market,” she told attendees.

“These rules have significantly reduced the number of times short sellers failed to deliver securities. Looking ahead, in the coming weeks, we will consider proposals to restrict the practice of short selling.”

The SEC hosted a roundtable discussion on securities lending and short selling in late 2009, inviting industry participants as well as beneficial owners who had seen losses during the credit crunch. The talks led to the creation of a number of proposals on restricting short selling, although the regulator has yet to reveal which of these are likely to be adopted.