Regulation SHO


DEFINITION of 'Regulation SHO'

A regulation implemented on January 3, 2005 that seeks to update legislations concerning short sale practices. Regulation SHO established "locate" and "close-out" standards that are primarily aimed at preventing the opportunity for unethical traders to engage in naked short selling practices.


The "locate" requirement requires that a broker has reasonable belief that the equity to be short sold can be borrowed and delivered to a short seller on a specific date before short selling can occur.

The "close-out" requirement represents the increased amount of delivery requirements imposed upon securities that have many extended delivery failures at a clearing agency.

This regulation represents the first time that short sale regulations were updated since 1938.

  1. Short Selling

    Short selling is the sale of a security that is not owned by ...
  2. Naked Shorting

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  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Short (or Short Position)

    A short position is the sale of a borrowed security, commodity ...
  5. Buy To Cover

    A buy order made on a stock or other listed security that closes ...
  6. Buyback

    The repurchase of outstanding shares (repurchase) by a company ...
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