Notice2025-02570
Order Granting Temporary Exemption Pursuant to Section 13(f)(3) of the Securities Exchange Act of 1934 From Compliance With Rule 13f-2 and Form SHO
Primary source
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Published
February 13, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 29 (Thursday, February 13, 2025)</title>
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[Federal Register Volume 90, Number 29 (Thursday, February 13, 2025)]
[Notices]
[Pages 9568-9569]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-02570]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102380]
Order Granting Temporary Exemption Pursuant to Section 13(f)(3)
of the Securities Exchange Act of 1934 From Compliance With Rule 13f-2
and Form SHO
I. Introduction
On October 13, 2023, the Securities and Exchange Commission
(``Commission'') adopted Rule 13f-2 (17 CFR 240.13f-2) and related Form
SHO \1\ (17 CFR 249.332) pursuant to the Securities Exchange Act of
1934 (``Exchange Act'') and the Dodd-Frank Wall Street Reform and
Consumer Protection Act. Rule 13f-2 requires institutional investment
managers that meet or exceed certain specified thresholds to file Form
SHO, in accordance with the form's instructions, with the Commission
within 14 calendar days after the end of each calendar month with
regard to certain equity securities via the Commission's Electronic
Data Gathering, Analysis, and Retrieval System (``EDGAR'').\2\ The
Commission will publish, on an aggregated basis, certain information
regarding each equity security reported by institutional investment
managers on Form SHO and filed with the Commission via EDGAR.\3\ The
effective date of Rule 13f-2 and Form SHO was January 2, 2024. The
compliance date for Rule 13f-2 and for reporting on Form SHO was
January 2, 2025. Institutional investment managers that meet or exceed
a reporting threshold specified under Rule 13f-2 are required to file
the Form SHO report for January 2025 within 14 calendar days after the
end of January 2025.
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\1\ Exchange Act Release No. 34-98738 (Oct. 13, 2023), 88 FR
75100 (Nov. 1, 2023) (``Rule 13f-2 Adopting Release'').
\2\ See 17 CFR 240.13f-2(a).
\3\ See 17 CFR 240.13f-2(a)(3).
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Since the Rule and Form SHO were adopted, Commission staff has been
working with industry participants to address operational issues
relating to the implementation of Form SHO reporting. Through
telephonic meetings and letters, certain institutional investment
managers that may meet the reporting thresholds specified in Rule 13f-2
have stated that they need additional time to implement Form SHO
reporting.\4\
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\4\ See, e.g., Letters from Howard Meyerson, Financial
Information Forum (June 24, 2024, Aug. 9, 2024, Nov. 8, 2024, Dec.
20, 2024) (each a ``FIF Letter''), available at <a href="https://fif.com/index.php/working-groups">https://fif.com/index.php/working-groups</a>; Letter from the Securities Industry and
Financial Markets Association (``SIFMA''), SIFMA's Asset Management
Group, the Investment Company Institute, the Insured Retirement
Institute, FIA Principal Traders Group, and the Investment Adviser
Association (Nov. 25, 2024) (``2024 SIFMA et al. Letter''),
available at <a href="https://www.sifma.org/wp-content/uploads/2024/11/Rule-13f-2-Extension-Request-Final-11-25-2024.pdf">https://www.sifma.org/wp-content/uploads/2024/11/Rule-13f-2-Extension-Request-Final-11-25-2024.pdf</a>; Letter from Managed
Funds Association and Alternative Investment Management Association
(Jan. 20, 2025) (``2025 MFA and AIMA Letter'') available at <a href="https://www.mfaalts.org/wp-content/uploads/2025/01/MFA-Short-Position-Reporting-Extension-Request-Final-Submitted-1.20.25.pdf">https://www.mfaalts.org/wp-content/uploads/2025/01/MFA-Short-Position-Reporting-Extension-Request-Final-Submitted-1.20.25.pdf</a>.
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Before the Commission's publication of the web-fillable version of
Form SHO and the related Form SHO XML technical specifications \5\ and
EDGAR Filer Manual updates \6\ on December 16, 2024 (collectively,
``December 16, 2024 Form SHO Documents''), a group of industry
participants submitted a letter requesting that the Commission extend
the current January 2, 2025 compliance date by eighteen months.\7\
Among other things, industry participants highlighted ongoing work in
connection with ``developing and implementing system changes needed to
capture relevant data so that association members [that are
institutional investment managers] are in a position to report . . .
consistent with the rule's requirements.'' \8\ Industry participants
also cited challenges in completing implementation of system builds and
testing for Form SHO reporting pending finalization and publication of
the Form SHO XML technical specifications, which the Commission
published on December 16, 2024.\9\ Further, industry participants also
stated that certain firms were ``subject to full code freezes at year-
end to help manage and mitigate IT risk.'' \10\
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\5\ Form SHO XML Technical Specifications are available at
<a href="https://www.sec.gov/submit-filings/technical-specifications#xml">https://www.sec.gov/submit-filings/technical-specifications#xml</a>.
\6\ EDGAR Filer Manual 24.4, Vol. II was published in EDGAR
Release 24.4, published December 16, 2024. <a href="https://www.sec.gov/submit-filings/edgar-filer-manual">https://www.sec.gov/submit-filings/edgar-filer-manual</a>.
\7\ 2024 SIFMA et al. Letter, at 1.
\8\ Id. See also 2025 MFA and AIMA Letter, at 2.
\9\ See, e.g., 2024 SIFMA et al. Letter, at 2 (stating that
publication of final Form SHO XML technical specification on
December 16, 2024, ``provid[es] reporters with very little time for
any final builds and testing before the January 2, 2025 compliance
date''); FIF Letter (Nov. 8, 2024), at 2 (stating it is ``highly
problematic for the Commission to require reporting for activity
that occurs beginning on January 2, 2025 when the Technical
Specifications will not be finalized until 17 days prior to such
date''). Publication of final technical specifications for Form SHO
coincided with the fourth quarter update to the EDGAR Filer Manual,
which also provides specific instructions and guidance to Form SHO
filers.
\10\ 2024 SIFMA et al. Letter, at 2. See also FIF Letter (Nov.
8, 2024), at 3; 2025 MFA and AIMA Letter, at 3.
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In addition, the Financial Information Forum (``FIF'') submitted
several letters before the publication of the December 16, 2024 Form
SHO Documents requesting an extension of the current January 2, 2025
compliance date for Rule 13f-2 and for Form SHO reporting for a
``reasonable period (for example six months)'' from the date the
Commission provides written guidance in response to interpretive
questions raised by FIF and other industry participants.\11\
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\11\ FIF Letter (Aug. 9, 2024) at 19 (recommending an extension
be for a ``reasonable period (for example, six months) from the date
the Commission publishes written FAQs in response to requests for
interpretive guidance from . . . market participants''). Accord FIF
Letter (Nov. 8, 2024) at 3 (requesting that the Commission grant ``a
six-month extension of the current implementation date, from the
date that the Commission publishes written FAQs (or equivalent
written guidance) in response to interpretive questions raised by
FIF members and other market participants''). See also, FIF Letter
(June 14, 2024) at 17 (stating that length of compliance date
extension depends on guidance received from the Commission to
questions raised by market participants).
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The December 16, 2024 Form SHO Documents provided additional
guidance and context for completing Form SHO. On January 20, 2025,
following the publication of those documents, the Managed Funds
Association (``MFA'') and the Alternative Investment Management
Association (``AIMA'') submitted a letter requesting a six-month
extension for compliance with the Rule ``until July 1, 2025 (or such
later date as the Staff deems appropriate).'' \12\ FIF also submitted a
letter on December 20, 2024, stating more time was needed for
compliance, in part, to implement the Form SHO instructions deployed in
the December 16, 2024 Form SHO Documents, but did not specify
timing.\13\
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\12\ 2025 MFA and AIMA Letter, at 2.
\13\ FIF Letter (Dec. 20, 2024).
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II. Discussion
The Commission agrees with the concerns expressed by commenters
about requiring reporting for activity that occurs beginning on January
2, 2025, when the Form SHO-specific XML technical specifications were
issued only a few weeks before that date. After the Commission
published the December 16, 2024 Form SHO Documents, commenters
suggested a shorter period would be workable--for example, six months
``(or such later date as the Staff deems appropriate).'' \14\ The
Commission has determined that a temporary exemption from compliance
for approximately twelve months strikes an appropriate balance between
the goal of Rule 13f-2 and Form SHO reporting to provide transparency
regarding certain short sale-related data and industry participants'
requests for additional time for implementation of
[[Page 9569]]
the Rule 13f-2 reporting requirements.\15\ Therefore, in consideration
of publication of the December 16, 2024 Form SHO Documents, granting a
temporary exemption from compliance with Rule 13f-2 and for Form SHO
reporting for approximately twelve months is appropriate to provide
industry participants sufficient time to complete implementation of
systems builds and testing, as well as to work with Commission staff to
address any outstanding operational and compliance questions regarding
Form SHO reporting.
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\14\ 2025 MFA and AIMA Letter, at 2.
\15\ See, e.g., FIF Letter (Nov. 8, 2024), at 1 (citing hosting
of thirty-six working group calls on Form SHO reporting); 2024 SIFMA
et al. Letter, at 1 (describing efforts by ``association members,''
since adoption of Rule 13f-2, to develop and implement system
changes to capture the data required for Form SHO reporting).
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Section 13(f)(3) of the Exchange Act \16\ authorizes the
Commission, by rule or order, to exempt, conditionally or
unconditionally, any institutional investment manager or security, or
any class of institutional investment managers or securities from any
or all of the provisions of section 13(f) of the Exchange Act or the
rules thereunder. Institutional investment managers that meet or exceed
a reporting threshold specified in Rule 13f-2 are required to file an
initial Form SHO report within 14 calendar days after the end of
January 2025. A temporary exemption from compliance with Rule 13f-2 and
Form SHO reporting will give institutional investment managers that
meet certain reporting thresholds specified in Rule 13f-2 sufficient
additional time to complete implementation of systems builds and to
test and work with Commission staff to address any outstanding
operational and compliance questions regarding Form SHO reporting.
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\16\ 15 U.S.C. 78m.
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The Commission is using its authority under section 13(f)(3) of the
Exchange Act to grant a temporary exemption from compliance with Rule
13f-2 and for reporting on Form SHO to give additional time to allow
for orderly compliance with Rule 13f-2.\17\ More specifically, the
temporary exemption will facilitate realization of the benefits of the
Rule by enhancing the accuracy of the data that would ultimately be
provided to investors by giving institutional investment managers
additional time to complete systems development, programming, and
testing, and to resolve operational issues in connection with
implementation of the Rule and Form SHO reporting.
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\17\ The Commission has the authority to issue exemptive relief
by order under Section 36 of the Exchange Act as well as under
Section 13(f)(3). Subject to certain exceptions, Section 36 of the
Exchange Act authorizes the Commission, by rule, regulation, or
order to exempt, either conditionally or unconditionally, any
person, security, or transaction, or any class or classes of
persons, securities or transactions, from any provision or
provisions of the Exchange Act or any rule or regulation thereunder,
to the extent that such exemption is necessary or appropriate in the
public interest, and is consistent with the protection of investors.
Although a temporary exemption from compliance with Rule 13f-2 and
Form SHO reporting will delay the benefits of the Rule, providing
additional time for industry participants required to make Form SHO
reports to address any operational issues and to comply with Rule
13f-2 reporting requirements would facilitate realization of the
benefits of the Rule by enhancing the accuracy of the data that
would ultimately be provided to investors. In this regard, a
temporary exemption from compliance would also be necessary or
appropriate in the public interest and consistent with the
protection of investors.
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III. Conclusion
Accordingly, the Commission hereby grants, pursuant to section
13(f)(3) of the Exchange Act, a temporary exemption from compliance
with Rule 13f-2 and Form SHO reporting effective February 7, 2025, and
ending January 2, 2026. Therefore, Form SHO reports for the January
2026 reporting period would be required to be filed within 14 calendar
days after the end of January 2026.
By the Commission.
Dated: February 7, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02570 Filed 2-12-25; 8:45 am]
BILLING CODE 8011-01-P
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