In a comment letter responding to the potential expansion of short interest reporting requirements (FINRA Regulatory Notice 21-19), the MFA detailed its support, conditional support and opposition to various proposed enhancements. (See prior coverage.)
The MFA explained that:
- it supports FINRA's proposed consolidation of short interest data publication, but does not support the inclusion of data pertaining to synthetic short positions created through options, as it is extremely difficult to provide such information in "an accurate and standardized manner";
- it does "not support publication of short interest data by market participant category, such as by proprietary and customer accounts or institutional and retail investors, as such data could be misinterpreted, resulting in harm to investors."
- it supports increasing, from twice a month to weekly, the frequency of interest position data reporting to FINRA and publication of the data;
- account-level short interest position information should not be reported and published because of the heightened risk to short sellers of cyberattacks and confidential account information data breaches;
- it recommends that FINRA consider swap-related reporting and information dissemination requirements only after Regulation SBSR("Regulatory Reporting and Public Dissemination of Security-Based Swap Information") is fully implemented so as to not confuse market participants and negatively impact Regulation SBSR's "transparency and price discovery enhancements"; and
- it would be difficult to establish a reporting framework for stock lending activity.
Primary Sources
- MFA Press Release: MFA Supports FINRA's Effort to Improve Aggregated Short Interest Reporting and Publication
- MFA Comment Letter: Regulatory Notice 21-19 - FINRA Requests Comment on Short Interest Position Reporting Enhancements and Other Changes Related to Short Sale Reporting
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