On 07 February 2025, the United States Securities and Exchange Commission (US SEC) issued an order titled Order Granting Temporary Exemption Pursuant to Section 13(f)(3) of the United States Securities Exchange Act of 1934 from Compliance with Rule 13f-2 and Form SHO. This exemption delays the requirement for institutional investment managers to comply with US SEC Rule 13f-2 and report on US SEC Form SHO until 02 January 2026, extending the original deadline of 02 January 2025. The first required US SEC Form SHO filings, initially due by 14 February 2025, will now be due by 17 February 2026, covering the January 2026 reporting period.
The order provides relief to institutional investment managers that meet or exceed certain reporting thresholds, giving them additional time to implement necessary technical updates and address compliance challenges. US SEC Rule 13f-2, adopted on 13 October 2023, mandates institutional investment managers meeting specified thresholds to file US SEC Form SHO within 14 calendar days after each month-end, reporting on certain equity securities through the US SEC’s EDGAR system. The US SEC intends to aggregate and publish relevant short sale-related data, improving market transparency.
The decision follows concerns from industry participants, including the United States’ Financial Information Forum, the Securities Industry and Financial Markets Association, the Managed Funds Association, and the Alternative Investment Management Association. These organisations raised operational issues related to implementing US SEC Form SHO reporting, particularly regarding system changes, data capture, and compliance testing. The US SEC published the US SEC Form SHO XML technical specifications and updated the EDGAR Filer Manual on 16 December 2024, but industry representatives stated that the short turnaround time before the 02 January 2025 compliance deadline posed technical challenges.
Market participants highlighted that firms needed additional time for software development, compliance integration, and risk management. Some companies were also subject to internal IT code freezes at year-end, further delaying their ability to implement necessary updates. In response, the US SEC determined that a 12-month exemption was an appropriate balance between ensuring compliance and providing sufficient time for market participants to prepare for the reporting obligations.
The temporary exemption, granted under Section 13(f)(3) of the United States Securities Exchange Act, will allow institutional investment managers to finalise systems, complete testing, and address any outstanding compliance concerns. The US SEC clarified that this delay does not alter the legal framework for short selling, stating that “abusive naked short selling as part of a manipulative scheme remains unlawful.”
The new compliance timeline extends the deadline for initial Form SHO filings until February 2026. Until then, institutional investment managers are expected to work with the US SEC to resolve operational concerns and ensure a smooth transition to full compliance. The US SEC may continue publishing failures to deliver data for equity securities twice per month and may maintain transparency measures already in place through self-regulatory organisations. The industry now has until early 2026 to implement necessary compliance measures before Rule 13f-2 and Form SHO reporting officially take effect.
US SEC Acting Chairman Mark Uyeda stated: “It is important that data collected by the Commission is accurate, complete, and helpful to the market, this exemption gives filers more time to implement the technical updates required for compliance according to standards that were released only on Dec. 16, 2024, immediately prior to the holidays. Regardless of this exemption, abusive naked short selling as part of a manipulative scheme remains unlawful, and the Commission will use its regulatory tools to combat such illegal activity.”
(Source: https://www.sec.gov/files/rules/exorders/2025/34-102380.pdf, https://www.sec.gov/newsroom/press-releases/2025-37)
