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New Enforcement Policies For Reg SHO And Fair Market Making Requirement

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New enforcement policies are going into effect today with regard to short selling. The first is FINRA 4320, which mandates 13 day buy-ins for open delivery failures applying to shares of non-reporting corporations.

FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now formally acknowledge the accessing of that exemption.

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