The Reg SHO threshold list
A course recap of the Reg SHO threshold list: the inclusion and removal criteria under Rule 203(c)(6), what listing establishes and what it does not, and why a listing date is not a squeeze timer. The full guide owns the topic.
Read the full guide
This lesson is a short recap. The full FennEdge guide, Reg SHO threshold list, owns this topic, with the dates to read, worked examples and sources.
Learning objectives
- Apply the inclusion and removal criteria, including both share-count conditions.
- Separate what a listing establishes from what it does not.
- Explain why a listing date sets no market-wide buy-in date.
Recap: the threshold list in five points
1. What the list is. Rule 203(c)(6) of Regulation SHO, the SEC's short-sale rules, defines a threshold security: an equity security of a reporting issuer with an aggregate fail to deliver position at a registered clearing agency, for five consecutive settlement days, of 10,000 shares or more and at least 0.5% of the issue's total shares outstanding, and included on a list published by a self-regulatory organization.
2. A worked example: five settlement days. Illustrative: Quarrystone Health (fictional) has 4,000,000 shares outstanding and a float of 2,500,000 shares. Its aggregate fails at the clearing agency over five settlement days:
| Settlement day | Aggregate fails | 10,000 or more? | At least 20,000? | Consecutive qualifying days |
|---|---|---|---|---|
| Mon 2026-09-14 | 21,000 | Yes | Yes | 1 |
| Tue 2026-09-15 | 26,500 | Yes | Yes | 2 |
| Wed 2026-09-16 | 24,000 | Yes | Yes | 3 |
| Thu 2026-09-17 | 20,000 | Yes | Yes (exactly 0.5%) | 4 |
| Fri 2026-09-18 | 29,000 | Yes | Yes | 5 |
To read the table, set the bar first. Both size conditions must hold each day: at least 10,000 shares, and at least 0.5% × 4,000,000 = 20,000 shares. The higher of the two, 20,000 shares, is the bar; the float plays no part. Every day clears it, Thursday exactly at 0.5%. After Friday, Quarrystone has met both conditions for five consecutive settlement days, so it meets the Rule 203(c)(6) criteria and becomes a threshold security once the self-regulatory organization includes it on its dated list. The conclusion: listing follows from a measured run of fails, checked day by day against a bar set by shares outstanding. It records that the run happened; it does not say who failed or why.
3. Resets and removal. The test is strict in both directions:
- If Thursday's fails had been 18,500 shares, Thursday would fail the 0.5% test even though it clears the 10,000-share floor. The count would restart at zero, and Quarrystone would need five fresh qualifying days.
- A reader who used the float would set the bar at 0.5% × 2,500,000 = 12,500 shares and count that 18,500-share day as qualifying. That is the wrong denominator.
- A threshold security comes off the list when its aggregate fail position does not exceed the level for five consecutive settlement days. Settlement days are not calendar days.
The listing markets and FINRA each publish their own dated lists. OTC securities of non-reporting issuers follow a separate FINRA rule with different criteria.
4. What listing establishes. It establishes that the security was on that list on that date. It does not establish why the fails happened: the SEC notes that fails can result from both long and short sales, and from delays such as customers delivering shares late, so a listing alone does not prove illegal naked shorting. It is not SSR status (SSR: the short-sale price test), and it is not your broker's borrow status (HTB vs. ETB).
5. The 13-day rule is not a squeeze timer. Rule 203(b)(3) requires a clearing participant whose fail position in a threshold security has lasted 13 consecutive settlement days to close it out by purchasing shares, and until it does, it and the brokers it clears for must pre-borrow before accepting short sales in that stock. Rule 204 separately requires most fails to be closed out much sooner. These obligations attach to each participant's own fail position, which the public list does not show. Adding 13 days to a stock's first listing date does not identify any day on which buying must happen, or how much.
Apply it in FennEdge
- The Reg SHO tool shows the current threshold list with its list date, how long each stock has been listed and an official source link. Read the list date before reading anything else.
- Ticker Research shows a company's shares outstanding and its SEC filings. Multiply shares outstanding by 0.5% and compare the result with 10,000 shares; the higher number is the daily bar, as in the Quarrystone example. Note the date of the share count you used, because it changes after offerings and reverse splits.
Exercises
Three exercises follow this recap: a concept check on what a listing establishes, a calculation of the smallest fail position that meets the size condition, and a scenario about a "13-day squeeze date" claim. Exercises, answers and progress are available after signing in.
Primary sources
- SEC Regulation SHO (eCFR, up to date as of 2026-10-01): Rule 203, borrowing and delivery requirements, paragraphs (b)(3) and (c)(6); Rule 204, close-out requirement.
- SEC. Key Points About Regulation SHO.
Sources checked 2026-10-06. Quarrystone Health and its share counts and dates are fictional and Illustrative. This lesson is education, not a recommendation to buy or sell any security. Past patterns do not indicate future results.