By Katanga Johnson

WASHINGTON, (Reuters) – The U.S. Securities and Exchange Commission(SEC) presented two proposals on Friday that would increase the transparency of data short sellers who wager that stocks will plummet. Investors and regulators are required to see the proposed changes in order to improve the level of transparency surrounding such trades.

SEC stated that the new rules provide public access to data about large short positions for equity securities.

Brokers will be mandated to “buy to cover” sales. The SEC stated in a release that this would apply if the purchaser holds any short position in the security. It would amend the National Market System Plan to add such information.

The measures taken Friday are open to public discussion. They come after Gary Gensler, the chief of the SEC, told Congress last year that he will increase scrutiny and require expanded disclosures in the wake of the GameStop (NYSE) saga, and Archegos Capital’s collapse.

The Financial Industry Regulatory Authority’s (FINRA), which has changed its reporting requirements regarding short-interest, and a U.S. Justice Department probe into manipulation by short sellers or hedge funds also led to this change.

Hedge funds allow short selling. This is where investors place a bet on the stock’s price falling. Investors often view this as a way to check corporate America. It allows shareholders to voice their concerns and does more than just sell a stock. However, the practice has sparked anger in the investment community, with many claiming that short sellers unfairly conspire against companies, publishing research that lowers stock prices.

According to the SEC, institutional investors managers who have a minimum $10 million short position or at least 2.5% total outstanding shares would be affected by these proposals. This would also be applicable to individuals who are in a negative position with an equity security issued by a non-reporting issuer.

Gensler said that these proposals would force investment managers into taking more control over short positions. It also provides greater transparency about their behaviour. Gensler said the agency would analyse the data and determine the impact of short selling on market events, before making it available to the public.

“It is important that the Commission and the public know more about the important market, particularly in volatile times.”