The regulatory landscape for institutional investment managers is evolving, and the latest significant change comes from the U.S. Securities and Exchange Commission (SEC) with the introduction of Form SHO. This new disclosure framework, implemented in 2023 and scheduled to become a requirement in February 2026, will usher in a new era of short sale transparency, fundamentally changing how short positions are monitored and reported.
If your firm engages in short selling of equity securities, understanding the intricacies of Rule 13f-2 and the requirements of Form SHO is crucial, especially as the compliance deadline rapidly approaches.
What is Form SHO and Why Does it Matter?
Form SHO is the required monthly filing for institutional investment managers whose short sale positions in designated equity securities exceed specific thresholds. Governed by Rule 13f-2 of the Securities Exchange Act of 1934, the framework aims to increase overall market transparency.
The key takeaway for filers is that while your firm must submit detailed information monthly, the SEC will only disclose the aggregated data by security. This smart approach enhances market visibility without compromising the anonymity of individual investors.
Key Compliance Dates and Reporting Obligations
The original implementation timeline has been adjusted, giving firms a final window to prepare:
- Initial Filing Deadline Postponed: Institutional investment managers are now expected to start filing Form SHO as of February 2026.
- Public Reporting Follows: Publicly aggregated reporting of Form SHO data will begin approximately three months after the initial filing date.
Who Must File?
Reporting obligations extend to entities trading for their own account, as well as individuals or organizations with investment discretion over others’ accounts. If your short sale positions surpass the detailed thresholds for a given month, you are required to file.
Identifying Reportable Securities and Thresholds
The scope of securities covered by Rule 13f-2 is significantly broader than previous regulations, like Section 13(f). It covers “equity securities,” including:
- Common and preferred stock
- Securities convertible, exercisable, or exchangeable into equity securities
- Securities of privately held companies
- Securities traded exclusively outside the United States
The reporting threshold for filing Form SHO depends on whether the security is from a Reporting Issuer (a public company that regularly files with the SEC) or a Non-Reporting Issuer.
| Issuer Type | Reporting Threshold |
| Reporting Issuers | A monthly average of daily gross short positions must be at least $10 million, or 2.5% of the issuer’s shares outstanding. |
| Non-Reporting Issuers | A gross short position must be $500,000 or more at the close of regular trading hours on any settlement date during the calendar month. |
Simplify Form SHO Compliance with the IVP Regulatory Reporting Solution
The complex nature of Form SHO, which requires accurate records, daily monitoring, and timely, detailed reporting across a broadened scope of securities, presents a significant operational burden.
The IVP Regulatory Reporting Solution is specifically designed to meet this challenge. Our platform provides:
- Intelligent Automation: Automate data collection and calculation of the complex daily averages and dollar thresholds required for filing.
- Real-Time Monitoring: Ensure you never miss a reporting trigger with continuous, real-time tracking of short sale positions.
- Comprehensive Reporting: Generate accurate, compliant Form SHO filings efficiently, reducing the risk of errors.
Moreover, by leveraging IVP Managed Services, your firm can fully outsource the entire regulatory compliance process. This allows your team to focus on strategic investment decisions while our experts handle the complexities of Form SHO and many other regulatory requirements, ensuring minimal risk and maximum efficiency.
Don’t wait until the February 2026 deadline. Implement a robust solution now to ensure a seamless transition into the new era of short sale transparency.
Learn more about the IVP Regulatory Reporting Solution right now or contact sales@ivp.in to schedule a live or online demo.
