The Securities and Exchange Commission announced Friday it is considering new rules and modifications to existing regulations to force short sellers into more regular disclosures of their bets.

Wall Street’s highest supervisor stated that the changes proposed would force institutional investors to submit short-sale data each month to the SEC. The SEC would make data aggregated about large short positions and daily short sales available to the public.

A trader that wants to make a profit on short-selling will borrow shares from a company and then put them on the stock exchange. In theory, the trader would buy the shares at a higher price and then return the equity to the asset manager or brokerage that loaned them.

In exchange for regular fees, asset managers loan these shares to short-sellers.

SEC Chairman Gary GenslerIn a press release.

Regulation SHO is a set of SEC rules that govern short-selling. The changes proposed to Regulation SHO would ensure confidentiality of the names of short sellers and managers.

Gensler made it clear in his comments that institutional managers with a position less than $10 million, or 2.5% of total outstanding shares, would be subject to the new rules.

He said, “It is important that the Commission and the public know more about the important market, particularly in times of volatility or stress.” The Commission would benefit from the proposed rule in addressing future market events. It will strike a delicate balance between transparency and price discovery.

New rules proposed by the SEC are the latest effort by the agency to increase its supervision of the practice. In recent years, lawmakers have been blaming it for creating dangerous and wild price swings in Wall Street.  This practice became controversial in the early 2021s when investors joined hands on social media to help juice stocks like GameStop, which attracted heavy short seller interest.

Last year, SEC suggested a rule that brokerages or asset managers who lend securities to short-sellers would have to report information on every loan made to an overarching body like Financial Industry Regulatory Authority (FIRA) within 15 minutes.

According to the SEC, it extended the period of public comment on this rule due to its most recent rule changes.