On July 27, 2009, the Securities and Exchange Commission announced that it made Interim Temporary Rule 204T of Regulation SHO a permanent rule. According to the Commission, Interim Temporary Rule 204T of Regulation SHO was approved in 2008 in response to continuing concerns regarding “fails to deliver” and potentially abusive “naked” short selling. With some modifications, permanent Rule 204T was adopted in the same form as the temporary rule. In general, permanent Rule 204(a) provides that, subject to certain exceptions, a participant of a registered clearing agency must deliver securities to a registered clearing agency for clearance and settlement on a long or short sale in any equity security by the applicable settlement date, or if a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency in any equity security for a long or short sale transaction in that equity security, the participant shall, by no later than the beginning of regular trading hours on the settlement day following the settlement date, immediately close out the fail to deliver position by borrowing or purchasing securities of like kind and quantity.

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