Form SHO FAQs

What is SEC Rule 13f-2?

Under SEC Rule 13f-2, institutional investment managers are required to file specific short-sale data on Form SHO. This rule applies to Managers exercising “investment discretion” and requires reports on equity securities if certain reporting thresholds are met. 

Who Needs to File Form SHO?

Managers defined by Section 13(f)(6)(A) of the Exchange Act, including brokers, dealers, and investment advisors, must file Form SHO monthly if they meet threshold reporting criteria for short sale data.

What is an Institutional Investment Manager?

Per the Exchange Act’s Section 13(f)(6)(A), an institutional investment manager is any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person. As such, the term ‘‘institutional investment manager’’ typically can include brokers and dealers, investment advisers, banks, insurance companies, pension funds and corporations.

Defining “Investment Discretion”

Investment discretion refers to the authority to decide which securities to buy or sell for an account. A manager has investment discretion if they:

• are authorized to determine what securities or other property shall be purchased or sold by or for the account 

• make decisions as to what securities or other property shall be purchased or sold by or for the account even though some other person may have responsibility for such investment decisions

• otherwise exercises such influence with respect to the purchase and sale of securities or other property by or for the account as the Commission, by rule, determines, in the public interest or for the protection of investors, should be subject to the operation of the provisions of this title and rules and regulations thereunder

What are the reporting thresholds?

• Threshold A: Threshold for Short Positions in Reporting Issuers 

• Threshold A will require reporting by Managers that have, for each equity security of a reporting company issuer, either:

• A monthly average gross short position with a U.S. dollar value of $10 million or more, or

• A monthly average gross short position as a percentage of shares outstanding of 2.5 percent or more

• What is a Reporting Issuer?

• A reporting issuer is any entity registered under Section 12 of the Exchange Act or required to file under Section 15(d). These issuers are typically public companies regularly providing financial and operational data to the SEC.

• Threshold B: Threshold for Short Positions in Non-Reporting Issuers

• Threshold B will require reporting by Managers that have, for each equity security of a non-reporting company issuer, a gross short position in the equity security with a U.S. dollar value of $500,000 or more at the close of regular trading hours on any settlement date during the calendar month. 

Form SHO Information Tables: Required Disclosures

• Information Table 1

• Managers report the number of shares representing their gross short position at the end of the month, along with the U.S. dollar value of these shares.

• Information Table 2

• Reports net activity (i.e., purchase or sale) for each security on each settlement date of the month, aggregating purchase and sale activity.

• Cover Page Requirements

• The cover page of Form SHO requires the Manager’s name, contact details, Legal Entity Identifier (LEI), and details of any other managers included in the report.

When is Form SHO Due?

Managers must file Form SHO within 14 calendar days following the end of each calendar month.

Need Help? We’ve Got You Covered

If compliance with Rule 13f-2 and Form SHO feels overwhelming, don’t worry – ACN is here to help. We specialize in making EDGAR easy for you. Let us take the stress out of your filing.

Further FAQs

What is the Scope of Covered Securities?

The rule applies to exchange-listed and OTC equity securities, ETFs, and certain derivatives, consistent with Regulation SHO.

What Counts as an Equity Security?

The term “equity security” is defined in section 3(a)(11) of the Exchange Act and 17 CFR 240.3a11-1 (“Rule 3a11-1”).

• 17 CFR § 240.3a11-1 - Definition of the term “equity security.”

• The term equity security is hereby defined to include any stock or similar security, certificate of interest or participation in any profit sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture, or certificate of interest in a business trust; any security future on any such security; or any security convertible, with or without consideration into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle, or other option or privilege of buying such a security from or selling such a security to another without being bound to do so.

Are ETFs Subject to Rule 13f-2 Reporting?

Yes, ETFs fall under the short sale reporting requirements, given their significant role in the short-side market. Reporting short-sale activity in ETFs provides added transparency to investors and regulators.

Are Fixed Income Securities Subject to Short Sale Rules?

No, fixed income securities are not covered under the SEC’s short sale rules and thus do not require reporting on Form SHO.

What About Derivatives, Options, Warrants, and Convertibles?

While certain derivatives (like options) are considered equity securities, derivatives that do not qualify as equity securities are outside the rule’s scope. 

Managers do not have to account for economic exposure to an underlying equity security created through the use of equity derivatives when calculating the reporting thresholds for reporting short sales of that underlying equity security. However, once a Manager meets or exceeds a reporting threshold for an underlying equity security, the Manager will then be required to report certain short activity for each settlement date during the reporting calendar month, and that disclosure will take into account activity in options, tendered conversions, secondary offering transactions, and other equity derivatives or activity that might affect the reported short positions on Form SHO,

Is There an Official List of Covered Securities?

No, the SEC does not provide an official list of covered securities, unlike Form 13F. Managers must refer to Rule 13f-2 to determine reporting obligations.

What is a Gross Short Position?

The term “gross short position” means the number of shares of the security for which information is being reported that are held short, without inclusion of any offsetting economic positions (including shares of the equity security for which information is being reported or derivatives of such security).

What if a Closing Price is Unavailable?

If a closing price isn’t available for calculating Threshold B, Managers should use the last purchase or sale price of that security.

What Information is Required for Each Security?

For each equity security on Form SHO, Managers must disclose the issuer’s name, Legal Entity Identifier (LEI), title of class, CUSIP, and Financial Instrument Global Identifier (FIGI), if available.

What Information is Required to be Disclosed on the Cover Page?

On the Cover Page of Form SHO, Managers will be required to report certain basic information including its name, mailing address, business telephone number and business email, as well as the name, title, business telephone number and business email of the Manager’s contact employee for the Form SHO report; and the date the report is filed. The Manager will also provide its non-lapsed Legal Entity Identifier (“LEI”) if it has one.

What about the Legal Entity Identifier (“LEI”)?

The Manager will also provide its non-lapsed Legal Entity Identifier (“LEI”) if it has one.

If other Managers are required to be listed in the “Other Manager(s) Reporting for this Manager” section of the Cover Page, the Manager will also be required to include the name and non-lapsed LEI of each such “Other Manager” listed, if the LEI of such “Other Manager(s)” is available to the Manager filing the Form SHO report.

How Will the SEC Use the Form SHO Data?

The SEC will publish aggregated data on gross short positions and net activities across all reporting Managers to enhance market transparency.