Short Selling Regulations

Summary

This practice note discusses the regulation of short selling of securities under the federal securities laws, including the borrowing and delivery, close-out, and circuit breaker provisions of Regulation SHO and the antifraud provisions of the Securities Exchange Act of 1934, as amended (Exchange Act), applicable to short sales. This practice note also discusses (1) the prohibition in Rule 105 of Regulation M (17 C.F.R. § 242.105) against short selling in connection with a public offering, (2) new Exchange Act Rule 13f-2 (17 C.F.R. § 240.13f-2), related Form SHO, and the U.S. Securities and Exchange Commission’s (SEC) order temporarily exempting compliance with the new rule until February 2026, and (3) a brief discussion of the rules of the Financial Industry Regulatory Authority (FINRA) and the stock exchanges applicable to short sales.