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MFA Submits Comment Letter to the SEC on Short Position and Short Activity Reporting Rule

MFA submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) in response to the proposed rule on short position and short activity reporting. 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.

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 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.”