Regulation SHO

The SEC's rulebook for short sales in the US: the locate requirement, close-out obligations for fails to deliver, and the threshold securities lists.

Adopted in 2004 and tightened after 2008, Regulation SHO governs how short sales are executed and settled rather than how positions are disclosed. Its main parts are the locate requirement before a short sale, the obligation to close out failures to deliver promptly, and the daily threshold securities lists that exchanges publish of stocks with persistent large fails.

The twice-monthly short interest that this site shows comes from a separate FINRA rule, not from Regulation SHO.

Related terms

Locate requirement: The US rule that a broker must identify a source of borrowable shares before accepting a short sale order.

Fails to deliver (FTD): Shares that were sold but not delivered at settlement; the SEC publishes aggregate fails twice a month.

Uptick rule (short sale circuit breaker): The US rule that restricts short selling in a stock for the rest of the day and the next day once it has fallen 10% from the previous close.