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MFA commends the SEC for proposing public aggregate disclosure of short positions by issuer but calls on the SEC to address significant concerns with the proposed additional private manager-level disclosure regime.

"Short selling is an essential tool that benefits markets. It promotes greater market efficiency and liquidity, reduces volatility, and helps expose corporate fraud and corruption," says MFA President and CEO Bryan Corbett. "While we support the SEC's initiative to publish aggregated short position data by issuer, the new private disclosure regime is duplicative and burdensome for market participants. It would open managers to inadvertent disclosure of their short positions and yield few benefits to regulators and the markets."

Short selling is an essential component of healthy functioning capital markets. It is a commonly used investment tool that benefits markets, investors, and everyday Americans by increasing efficiency, promoting liquidity, reducing volatility, and exposing corporate fraud and corruption.

MFA has long supported the publication of aggregated short position data by issuer on a weekly basis. However, the SEC's proposed rule would implement a duplicative reporting regime for information that is already readily available through existing reporting frameworks. MFA anticipates the proposal would impose significant costs, burdens, and risks on market participants, including risk of disclosure of sensitive proprietary information on an attributed basis, while yielding limited incremental benefits to the market.

MFA's full comments to the SEC's proposed rule on Short Position and Short Activity Reporting can be found here and key passages from the letter are available below.

MFA emphasizes that public short position disclosure aggregated by issuer is beneficial to markets and market participants. From the letter: "[We] also share the Commission's view that certain categories of short position data, if collected and reported appropriately, will promote greater risk management among market participants and may facilitate capital formation. We believe that transparency of certain aggregate short position data is beneficial to markets and market participants and are supportive of equal access to this information by all investors."

MFA argues that the SEC's proposed collection of manager-level short positions through Form SHO is duplicative as the bulk of the information is already readily available. From the letter: "We do, however, have strong concerns about the breadth of the short position data the SEC would collect and disseminate under Rule 13f-2 and the proposed onerous and duplicative collection via Form SHO of data that is already available through existing infrastructure. Much of the data proposed to be collected and disseminated is not mandated by Section 929X(a), and the Commission does not adequately justify why it is going significantly beyond Congress's explicit mandate."