Post by fastwalker on Nov 5, 2004 22:48:07 GMT -5
Do we have information on the new Laws dealing with NSS?
The SEC also adopted amendments to Rule 105 of Regulation M to remove the current shelf offering exception, and issued interpretive guidance addressing sham transactions designed to evade the rule. The amendment applies to short sales effected within five days prior to the pricing of a shelf offering. Such short sales may not be covered with offering securities purchased from an underwriter or other broker-dealer participating in the offering. The Rule 105 amendments will be effective 30 days after publication in the Federal Register, and the interpretive guidance will be effective upon such publication.
Rule 200, which among other things, will re-designate current Rule 3b-3 with some
modifications to define ownership and aggregation of securities positions, and
include a requirement to mark all sell orders in all equity securities. Rule 200 will become effective 30 days after publication.
Rule 202(T), which establishes procedures to allow the SEC to temporarily suspend the operation of the current "tick" test in Rule 10a-1, and any short sale price test of any exchange or national securities association, for specified securities.
Rule 203, which will incorporate current Rule 10a-2 and will create a uniform SEC rule requiring broker-dealers, prior to effecting short sales in all equity securities, to "locate" securities available for borrowing. There will be limited exceptions from the locate requirement, including for short sales by registered market makers in connection with bona-fide market making. Rule 203 also imposes additional requirements on designated "threshold securities." Rule 203 defines a threshold security to mean an equity security for which there is an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency of 10,000 shares or more and that is equal to at least 0.5% of the issue's total shares outstanding. Rule 203 will become effective 30 days after publication with a compliance date of January 3, 2005, to permit firms to make programming and procedural adjustments.
Where a clearing agency participant has a fail to deliver position in threshold securities that persists for ten consecutive days after settlement, the participant must take action to close out the position. Until the position is closed out, the participant, and any broker-dealer for which it clears transactions, may not effect further short sales in the particular
threshold security without borrowing or entering into a bona fide arrangement to borrow
the security.
Below is some information about Regulation SHO as adopted. This was reported in the SEC's 6/23/04 Press Release: The SEC voted to adopt new Regulation SHO under the Securities Exchange Act of 1934. Regulation SHO, which provides a new regulatory framework governing short selling of securities, includes the following. Rule 202(T), which establishes procedures to allow the SEC to temporarily suspend the operation of the current "tick" test in Rule 10a-1, and any short sale price test of any exchange or national securities association, for specified securities.
Through a separate order, the SEC will suspend, on a pilot basis for a period of one-year, the tick test provision of paragraph (a) of Rule 10a-1, and any short sale price test of any exchange or national securities association, for approximately one-third of stocks in the Russell 3000 index.
The order also will suspend, on a pilot basis for a period of one year, the tick test provision of paragraph (a) of Rule 10a-1 for short sales executed in any security included in the Russell 1000 index after 4:15 p.m. Eastern, and all other securities after the close of the consolidated tape, and until the open of the consolidated tape the next day.
The SEC is aware of investor concerns about naked short selling, and has taken action in this area. For example, the SEC has brought prior enforcement actions against parties engaging in naked short selling as part of a manipulative scheme. [1[ See, e.g., Rhino Advisors, Inc. and Thomas Badian: Lit. Rel. No.18003 (February 27, 2003); See also SEC v. Rhino Advisors, Inc. and Thomas Badian, Civ. Action No. 03 civ 1310 (RO) (Southern District of New York).
The SEC also adopted amendments to Rule 105 of Regulation M to remove the current shelf offering exception, and issued interpretive guidance addressing sham transactions designed to evade the rule. The amendment applies to short sales effected within five days prior to the pricing of a shelf offering. Such short sales may not be covered with offering securities purchased from an underwriter or other broker-dealer participating in the offering. The Rule 105 amendments will be effective 30 days after publication in the Federal Register, and the interpretive guidance will be effective upon such publication.
Rule 200, which among other things, will re-designate current Rule 3b-3 with some
modifications to define ownership and aggregation of securities positions, and
include a requirement to mark all sell orders in all equity securities. Rule 200 will become effective 30 days after publication.
Rule 202(T), which establishes procedures to allow the SEC to temporarily suspend the operation of the current "tick" test in Rule 10a-1, and any short sale price test of any exchange or national securities association, for specified securities.
Rule 203, which will incorporate current Rule 10a-2 and will create a uniform SEC rule requiring broker-dealers, prior to effecting short sales in all equity securities, to "locate" securities available for borrowing. There will be limited exceptions from the locate requirement, including for short sales by registered market makers in connection with bona-fide market making. Rule 203 also imposes additional requirements on designated "threshold securities." Rule 203 defines a threshold security to mean an equity security for which there is an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency of 10,000 shares or more and that is equal to at least 0.5% of the issue's total shares outstanding. Rule 203 will become effective 30 days after publication with a compliance date of January 3, 2005, to permit firms to make programming and procedural adjustments.
Where a clearing agency participant has a fail to deliver position in threshold securities that persists for ten consecutive days after settlement, the participant must take action to close out the position. Until the position is closed out, the participant, and any broker-dealer for which it clears transactions, may not effect further short sales in the particular
threshold security without borrowing or entering into a bona fide arrangement to borrow
the security.
Below is some information about Regulation SHO as adopted. This was reported in the SEC's 6/23/04 Press Release: The SEC voted to adopt new Regulation SHO under the Securities Exchange Act of 1934. Regulation SHO, which provides a new regulatory framework governing short selling of securities, includes the following. Rule 202(T), which establishes procedures to allow the SEC to temporarily suspend the operation of the current "tick" test in Rule 10a-1, and any short sale price test of any exchange or national securities association, for specified securities.
Through a separate order, the SEC will suspend, on a pilot basis for a period of one-year, the tick test provision of paragraph (a) of Rule 10a-1, and any short sale price test of any exchange or national securities association, for approximately one-third of stocks in the Russell 3000 index.
The order also will suspend, on a pilot basis for a period of one year, the tick test provision of paragraph (a) of Rule 10a-1 for short sales executed in any security included in the Russell 1000 index after 4:15 p.m. Eastern, and all other securities after the close of the consolidated tape, and until the open of the consolidated tape the next day.
The SEC is aware of investor concerns about naked short selling, and has taken action in this area. For example, the SEC has brought prior enforcement actions against parties engaging in naked short selling as part of a manipulative scheme. [1[ See, e.g., Rhino Advisors, Inc. and Thomas Badian: Lit. Rel. No.18003 (February 27, 2003); See also SEC v. Rhino Advisors, Inc. and Thomas Badian, Civ. Action No. 03 civ 1310 (RO) (Southern District of New York).
