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October 13, 2023

SEC’s Securities Lending and Short Sale Rules Shed Light on Crucial Markets To Fight Abuses and Market Instability

WASHINGTON, D.C.—Today, the U.S. Securities and Exchange Commission (SEC) adopted final rules requiring that securities lenders report the material terms of their securities lending transactions and that institutional investment managers report certain data on their short sales. Legal Director and Securities Specialist Stephen Hall released the following statement:

“The lack of transparency in the securities lending market has contributed to financial instability multiple times in recent years. Securities lending contributed directly to the collapse of AIG in 2008.  And securities lending facilitates short selling, which precipitated the trading frenzy surrounding GameStop and other meme stocks in 2021. If regulators and the public had better and more timely information about the lending of securities and short sales during those times, they might have been better positioned to prevent or respond to those destabilizing events.

“Fortunately, the rules that the SEC adopted today address some of the deficiencies regarding the available information on securities lending and short sales. The requirement that securities lenders report the material terms of their lending transactions will enable both borrowers and lenders to know whether the terms of securities loans are consistent with market conditions and practices.  It will also better equip the SEC and other regulators to guard against the risks to financial stability that may result from the activities that securities lending facilitates, such as short selling.  In that regard, the requirement that institutional investment managers report gross short positions will also provide the SEC and market participants with vital information about short positions in the market.  We commend the SEC for finally adopting these rules, after the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mandated that it do so.

“In some respects, we wish the SEC had gone even further.  With respect to securities lending, the SEC should have shortened the proposed time periods for reporting and publicly disclosing the required information; instead, the SEC lengthened some of the time periods from the proposed rules.  With respect to short sales, the SEC should have eliminated or reduced the short position thresholds required for reporting by institutional investment managers; instead, the SEC raised the thresholds required for reporting.  Nonetheless, the increased transparency that will result from the rules the SEC adopted will protect investors and the integrity of the markets.”

See our comment letters on the securities lending and short sale rules for more information.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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