Investment Banking Disclosures Sec 2009 34 60388
SEC Adopts Final Rule Enhancing Delivery Requirements on Sales of All Equity Securities to Protect Against Naked Short Selling Abuses
Rule 204 of Regulation SHO
On July 28, 2009, the Securities and Exchange Commission ("SEC") adopted Rule 204 of Regulation SHO (PDF). This Rule extends permanently the requirements of the Rule 204T requiring the delivery of equities sold long or short on settlement date.
What this means for you
In compliance with the terms of the Rule, any fail to deliver position must be closed out by the opening of trading on T+4. While Credit Suisse will use its best efforts to minimize the impact of any fails, we may be required to purchase shares from another source to cover your position should you not deliver the necessary shares by settlement. Should the fail continue to exist past the opening of trading on T+4, the Rule requires that shares be pre-borrowed prior to Credit Suisse accepting any short sales in that security from any client until the fail to deliver position is closed out. In such case, clients will be required to obtain a pre-borrow from Credit Suisse’s Stock Loan Department prior to entering a short sale with us.