What’s next for 13f-2?

Earlier this month, the SEC issued an exemptive order extending the compliance deadline for filing Form SHO from February 14, 2025, to February 17, 2026.

The adopted rule 13f-2 requires institutional investment managers that meet or exceed certain thresholds to file Form SHO with the SEC within 14 days after the end of each calendar month via EDGAR.

The deadline extension follows months of speculation about legal and political challenges to the rule, including a lawsuit in the Fifth Circuit Court of Appeals that could have led to 13f-2 being overturned.

In light of this decision, we’re addressing three of the most common questions raised by the compliance community.

1. Why did the SEC delay 13f-2??

Accurate Data?

The first question investment managers were left asking was simple: ‘Why?

“It is important that data collected by the Commission is accurate, complete, and helpful to the market,” said SEC Acting Chairman Mark Uyeda in the SEC’s press release earlier this month.?

Currently, there are significant gaps in the SEC's guidance on what data must be reported on Form SHO. This includes uncertainty around which issuers fall under Threshold B and whether the rule applies to foreign issuers, as originally indicated in the final rule.

The SEC’s explanation of the final rule has added to the confusion. They’ve stated that the focus for Threshold B should be on the nature of the transaction rather than the issuer of the security. A broad interpretation of Threshold B is a key point in the ongoing litigation against the SEC, with petitioners arguing that the rule’s extraterritorial impact may be unlawful or arbitrary.

Implementation Time

The ‘final’ technical specifications for Form SHO were released on December 16, 2024, with an initial compliance date set for January 2, 2025. However, on January 30, 2025—just 15 days before the original filing deadline—the SEC issued further revisions to these specifications.

This last-minute change led to widespread concern, with industry associations requesting additional time due to delays in receiving the tech specs and ongoing regulatory uncertainties, including the extraterritorial application of Threshold B.

This sequence of events suggests some confusion within the SEC, likely driven by uncertainties raised in the litigation challenging Rule 13f-2, as well as expected shifts with the incoming administration.

2. What’s going to happen next??

All eyes are on the upcoming opinion from the Fifth Circuit Court of Appeals.

The case was heard on October 7, 2024, in New Orleans, and the Court’s decision could potentially vacate Rule 13f-2 entirely. However, we believe the most likely outcome is that Rule 13f-2 will survive the challenge, either in full or in part.

If Rule 13f-2 is upheld, we expect the SEC’s FAQs to be released shortly afterward. After that, it’s once again on firms to prepare for the February 2026 filing date.?

It’s worth noting that the Fifth Circuit Court handles a wide array of cases, not just those related to securities law. Its jurisdiction spans Texas, Louisiana, and Mississippi—states that are not as central to capital markets as financial hubs like New York. This broader scope may contribute to the time needed for the Court to fully assess the complex legal issues involved. We anticipate the opinion will be issued soon.

3. Can the SEC extend time again??

They could, but it’s unlikely.?

Authority to issue Exemptive Relief?

Under the Securities Exchange Act of 1934, the SEC has the authority to grant exemptions from certain reporting requirements, including those under Section 13(f)(2). However, any exemption granted must be clearly justified as necessary and beneficial to the public, with the aim of protecting investors or ensuring fair and orderly markets.

The SEC can also extend exemptions to other requirements under the Exchange Act, provided doing so serves the public interest and safeguards investors.

Could they delay 13f-2 indefinitely or again??

In theory, the SEC's powers are broad enough to allow for an indefinite delay of 13f-2. However, in practice, continuing to grant exemptive relief without clear justification would likely be seen as unlawful and would face significant political and legal challenges.

While this doesn't entirely rule out the possibility of further delays, it would require a compelling reason for the SEC to extend the timeline again.

Final Thoughts

As we await the Fifth Circuit’s decision, the future of Rule 13f-2 remains uncertain. While it’s possible that the rule is completely overturned, the likely outcome is that it persists in some form, with clarifications to come from the SEC. Should that be the case, firms will once again be on the clock, with less than a year before the 17 February 2026 filing deadline.?

While FundApps clients might have been ready for the February 2025 filing date, it is evident from the letters sent by industry associations that other firms were not. Regardless of the Fifth Circuit’s outcome, it’s clear that the implementation-or potential rollback-of 13f-2 will have significant implications for market participants in the coming weeks.?

What else is on our radar in 2025?

While we once again await the fate of 13f-2, it’s not the only thing on our minds in 2025. With new political agendas, the introduction of new regulations, and changing deadlines, investment managers will be busy this year.?

Here are a few examples of what we’re monitoring at FundApps :

Extension of Form PF Compliance Date: The SEC and CFTC have extended the deadline for complying with changes to Form PF from March 12, 2025, to June 12, 2025. For certain investment advisers managing private funds, the extension gives more time to adjust their systems in preparation for compliance.

New UK Short Selling Regime: In a major change, only anonymised, aggregate net short positions will now be published by the FCA. This is a departure from the current U.K. SSR and EU law, under which parties holding short positions over 0.5% must be named publicly, alongside details of their transactions.

New US-China Outbound Investment Regime: The US has just introduced industry-related investment restrictions on US investors investing in Chinese AI, quantum computing and semiconductor companies. The restrictions carry significant civil and criminal sanctions.