Rule 200 -- Definition of "Short Sale" and Marking Requirements
The term short sale shall mean any sale of a security which the seller does
not own or any sale which is consummated by the delivery of a security borrowed
by, or for the account of, the seller.
A person shall be deemed to own a security if:
The person or his agent has title to it; or
The person has purchased, or has entered into an unconditional contract,
binding on both parties thereto, to purchase it, but has not yet received it;
The person owns a security convertible into or exchangeable for it and has
tendered such security for conversion or exchange; or
The person has an option to purchase or acquire it and has exercised such
The person has rights or warrants to subscribe to it and has exercised such
rights or warrants; or
The person holds a security futures contract to purchase it and has received
notice that the position will be physically settled and is irrevocably bound
to receive the underlying security.
A person shall be deemed to own securities only to the extent that he has
a net long position in such securities.
A broker or dealer shall be deemed to own a security, even if it is not net
The broker or dealer acquired that security while acting in the capacity
of a block positioner; and
If and to the extent that the broker or dealer's short position in the security
is the subject of offsetting positions created in the course of bona fide arbitrage,
risk arbitrage, or bona fide hedge activities.
A broker-dealer shall be deemed to own a security even if it is not net long,
The broker-dealer is unwinding index arbitrage position involving a long
basket of stock and one or more short index futures traded on a board of trade
or one or more standardized options contracts as defined in 17 CFR 240.9b-1(a)(4);
If and to the extent that the broker-dealer's short position in the security
is the subject of offsetting positions created and maintained in the course of
bona-fide arbitrage, risk arbitrage, or bona fide hedge activities; and
The sale does not occur during a period commencing at the time that the Dow
Jones Industrial Average has declined by two percent or more from its closing
value on the previous day and terminating upon the establishment of the closing
value of the Dow Jones Industrial Average on the next succeeding trading day.
In order to determine its net position, a broker or dealer shall aggregate
all of its positions in a security unless it qualifies for independent trading
unit aggregation, in which case each independent trading unit shall aggregate
all of its positions in a security to determine its net position. Independent
trading unit aggregation is available only if:
The broker or dealer has a written plan of organization that identifies
each aggregation unit, specifies its trading objective(s), and supports its
Each aggregation unit within the firm determines, at the time of each sale,
its net position for every security that it trades;
All traders in an aggregation unit pursue only the particular
trading objective(s) or strategy(s) of that aggregation unit and do not coordinate
that strategy with any other aggregation unit; and
Individual traders are assigned to only one aggregation unit at any time.
A broker or dealer must mark all sell orders of any equity security as "long," "short," or "short exempt."
An order to sell shall be marked "long" only if the seller is deemed
to own the security being sold pursuant to paragraphs (a) through (f) of this
section and either:
The security to be delivered is in the physical possession
or control of the broker or dealer; or
It is reasonably expected that the security will be in the physical possession
or control of the broker or dealer no later than the settlement of the transaction.
Upon written application or upon its own motion, the Commission may grant
an exemption from the provisions of this section, either unconditionally or on
specified terms and conditions, to any transaction or class of transactions,
or to any security or class of securities, or to any person or class of persons.
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