By Irwin Speizer
Hedge funds thought they already had plenty of hoops to jump through in late July when the U.S. Securities and Exchange Commission again revised its rules on short sales, adding another item to the industry's growing checklist of compliance tasks. The SEC's action makes permanent some restrictions to prevent naked short sales and, for the time being, has shifted short-sale reporting responsibilities from fund managers to the exchanges.
"Traders will need to be aware of the new restrictions, and hedge funds will need systems to monitor their activity and compliance with the regulations," says Alex Viall, who heads up the New York City office of Complinet, a provider of compliance and risk solutions based in London.
The new SEC short-sale rules, along with other restrictions under consideration, make it increasingly difficult for managers without sophisticated software to demonstrate thorough compliance across a range of activities. Now,...