2023-10-13 20:44:03
Washington (awp/afp) – The watchdog of the American Stock Exchange, the SEC, adopted new rules on Friday to strengthen the transparency of short selling.
This practice shook Wall Street during the financial crisis in 2008 and more recently during the upturn in volatile stocks such as that of the GameStop video game store network in 2021.
“The SEC has adopted a new rule to provide more transparency to investors and other market participants by requiring that more data on short sales be available to the public,” said a press release from the securities authority .
Short selling consists of borrowing a security (for the payment of a commission) by betting on its decline.
If the hypothesis is verified, the speculator can buy back the security at a lower price to return it to the lender and pocket the difference between the sales price and the purchase price. If the price shows, the bettor may be exposed to heavy losses.
Under the new regulations, managers will be required to submit data regarding their potential short sales to the SEC, which will be aggregated and made public by the US Securities and Exchange Commission.
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