📰THE DISAPPEARING SHORTS
NAKEDSHORTSTOP™ REPORTS:
FINRA Identified a Gap in Short-Interest Reporting. Then It Withdrew the Rule.
In 2025, 2,426 equity securities disappeared from the market’s symbol system.
Nearly half of them had something in common.
According to Financial Industry Regulatory Authority (FINRA), its own analysis found that, 1,122 — approximately 46% — still showed outstanding reported short interest at their last short-interest reporting date.
Then their symbols disappeared.
And under the existing reporting system, FINRA might never receive another short-interest report showing what remained at the end.
FINRA called it a “data gap.”
46%
of securities losing their symbols in 2025 still showed outstanding reported short interest at their last reporting date.
Source: FINRA, SR-FINRA-2026-012
In May 2026, the regulator proposed changing the rules.
The idea was remarkably simple.
Before a stock symbol disappeared, FINRA wanted one last snapshot.
Not an estimate.
Not speculation.
A final report of members’ gross short positions as of the last settlement date on which that symbol remained in effect.
FINRA said that final report would provide more complete information to regulators and market participants and would allow it to monitor compliance with Regulation SHO — the U.S. Securities and Exchange Commission’s (SEC) regulatory framework governing short sales — more efficiently.
Then came the resistance.
And on August 5, 2026, FINRA withdrew the proposal.
The Eight-Day Gap
The 46% figure requires some context.
It does not mean that 46% of the securities disappearing in 2025 had been naked shorted.
Those were reported short positions.
But FINRA identified another problem.
Among those 1,122 securities, there was an average eight-day gap between the last ordinary short-interest reporting date and the final settlement date on which the symbol still existed.
What happened to those short positions during those final days?
Did they increase?
Decrease?
Close?
Remain outstanding?
Under the existing system, FINRA might never receive another short-interest report telling it.
The proposed rule would have changed that.
One final photograph.
What was there when the lights went out?
What the 46% Doesn’t Tell Us
There is another reason that number must be understood carefully.
Reported short interest isn’t necessarily synonymous with all economic short exposure.
FINRA itself acknowledged this.
The proposed amendments addressed certain securities-loan obligations resulting from “arranged financing.” FINRA said those obligations are economically equivalent to short-interest positions but currently aren’t reported as short interest and therefore aren’t included in the short-interest data available to FINRA or market participants.
FINRA wanted them included because the borrower ultimately remains obligated to purchase shares to satisfy the loan obligation.
That is significant.
Because it means the debate surrounding SR-FINRA-2026-012 wasn’t merely about publishing the same short-interest number more frequently.
It was also about something more fundamental:
What does the reported short-interest number actually capture?
And what doesn’t it capture?
FINRA Wanted More Than One Window Opened
The proposal contained several significant changes.
FINRA wanted short-interest reporting increased from twice monthly to weekly.
It wanted certain arranged-financing obligations incorporated into reported short interest.
It wanted a final short-interest report when a security’s symbol disappeared.
And proposed Rule 4321 addressed another regulatory blind spot:
fails to deliver (FTD).
When a clearing firm allocates responsibility for an FTD to a correspondent broker-dealer, FINRA acknowledged that it is often unaware which member actually bears the Regulation SHO close-out obligation unless it goes back to the clearing firm and asks.
Rule 4321 would have required clearing firms to report those allocations, including the security, the correspondent firm, the number of failed shares and relevant settlement and allocation dates.
And there is an important detail.
That information wasn’t going to be publicly disseminated.
FINRA specifically said it would be used only for regulatory purposes.
The regulator responsible for monitoring broker-dealer compliance with Regulation SHO wanted a clearer view of which member carried certain close-out obligations.
Then Came the Resistance
The SEC received a concentrated group of formal comments on SR-FINRA-2026-012, including submissions from Securities Industry and Financial Markets Association (SIFMA), the Financial Information Forum (FIF), Nasdaq, the Managed Funds Association (MFA) and the Alternative Investment Management Association (AIMA).
They didn’t all agree.
Nasdaq supported important elements of the proposal.
Other organizations raised concerns involving operational burden, cost, duplication, regulatory overlap and protection of proprietary trading information.
But one objection was particularly striking.
FIF stated that “the requirement to report on deleted symbols has no disclosure value since the security will not be tradeable,” and argued that the requirement would increase the manual reporting burden.
Its position was essentially that once the security could no longer trade, the final report lacked sufficient disclosure value to justify the additional burden.
That argument takes us to the heart of this story.
No Disclosure Value – To Whom?
If short-interest information exists solely to help an investor decide whether to buy or sell a security tomorrow, the argument is understandable.
The security doesn’t trade anymore.
But FINRA identified another purpose:
Regulatory surveillance.
FINRA specifically said the final report would help it monitor Regulation SHO compliance more efficiently.
And there is another purpose that matters to the shareholders of a security that has just disappeared:
Accountability.
What short positions existed when trading ended?
What obligations remained?
What changed between the last ordinary reporting date and the security’s disappearance?
Were the outstanding positions ultimately reconciled?
Those aren’t questions about tomorrow’s investment strategy.
They’re questions about what happened yesterday.
Which leads to an obvious counterquestion:
If a security can no longer trade, isn’t that precisely when a final accounting becomes important?
The Proprietary-Trading Shield
Another recurring argument against greater short-sale transparency concerns protection of proprietary trading strategies.
That concern can be legitimate.
Detailed real-time disclosure of an investment firm’s positions could allow competitors to reverse-engineer its strategy or trade against it.
But the words proprietary trading information should not automatically end a transparency discussion.
There are three questions worth asking whenever that argument appears:
Proprietary to whom?
For how long?
At what level of detail?
Information supplied confidentially to FINRA is not the same as publishing a hedge fund’s trading book.
Aggregated information isn’t the same as identifying individual accounts.
Delayed historical information isn’t the same as real-time disclosure.
And a final aggregate position in a security that no longer trades presents a very different question from revealing an active trading strategy.
Markets require legitimate confidentiality.
They also require accountability.
The two are not mutually exclusive.
The Opposition Intensifies
SIFMA submitted comments on June 8 and again on June 18. The SEC’s docket records both submissions.
By the later submission, SIFMA wasn’t simply asking for implementation adjustments.
It was calling for FINRA to withdraw the proposal or for the SEC to disapprove it.
Again, the financial industry wasn’t unanimous.
But substantial resistance to SR-FINRA-2026-012 was now part of the public record.
The SEC subsequently extended its consideration period, saying it needed additional time to consider the proposed rule change and the issues raised. The Commission established August 14, 2026 as the date by which it would approve or disapprove the proposal, or institute proceedings to determine whether it should be disapproved.
The proposal remained alive.
Then, on August 5, 2026:
FINRA withdrew it.
The SEC’s official rulemaking page now identifies SR-FINRA-2026-012 simply as:
The Snapshot Disappeared Too
FINRA didn’t merely withdraw one controversial component.
The entire package disappeared.
Weekly short-interest reporting.
Arranged-financing reporting.
FTD allocation reporting.
And the final deleted-symbol snapshot.
That last provision is particularly difficult to overlook.
FINRA estimated that implementing the final-report requirement would not impose substantial ongoing costs, although firms might need an upfront system or process change.
FINRA had identified the data gap.
It had quantified it.
It had explained its regulatory value.
It had proposed closing it.
Then the proposal was withdrawn.
And the gap remained.
Which brings us to a security whose shareholders have spent years asking essentially the same question.
MMTLP: When the Endpoint Became the Story
Meta Materials Series A Preferred Shares, trading under the symbol MMTLP, didn’t quietly disappear.
FINRA confirms that MMTLP was the OTC equity symbol it assigned to Meta Materials’ Series A Preferred Shares.
Its ending took place under a spotlight.
Trading was halted.
The symbol disappeared.
MMTLP shares were cancelled as part of the distribution of Next Bridge Hydrocarbons shares.
And shareholders began asking a question that has never really gone away:
What was outstanding when trading stopped?
FINRA has taken a clear position.
It says its investigation found no evidence of significant naked short selling in MMTLP at the end of trading.
That conclusion belongs in the record.
But it does not end the inquiry.
Because FINRA also acknowledges that it does not have the jurisdiction, authority, or data necessary to conduct the comprehensive beneficial-owner share-count audit shareholders have been seeking.
Those two statements need to be considered together.
FINRA says it found no evidence of significant naked short selling.
Yet FINRA also acknowledges limitations in its ability to perform the complete reconciliation that shareholders have been demanding.
And shareholders have continued reporting questions and problems involving receipt and registration of their Next Bridge shares.
That distinction matters.
A security can have a defined number of shares issued by an issuer while brokerage systems contain beneficial ownership positions requiring reconciliation against those shares.
That reconciliation is the question.
The Reporting Date That Came Too Late
Here the connection between MMTLP and FINRA’s 2026 proposal becomes remarkably direct.
The last publicly available MMTLP short-interest settlement date was November 30, 2022.
That next reporting settlement date was December 15, 2022.
The last publicly available MMTLP short-interest settlement date was November 30, 2022.
MMTLP was subsequently cancelled and its symbol deleted before the next scheduled short-interest reporting settlement date.
The reporting system never produced a final public short-interest snapshot at the endpoint.
It came too late.
The ordinary short-interest reporting mechanism therefore never produced the kind of final symbol-based snapshot investors would naturally want to examine.
FINRA later estimated, through its regulatory review, approximately 2.65 million shares of aggregate broker-dealer short interest as of December 12, 2022.
But FINRA’s 2.65-million-share estimate was subsequently challenged by Next Bridge Hydrocarbons itself.
In a January 23, 2024 letter sent directly to FINRA’s Executive Vice President and Chief Legal Officer, Next Bridge said it had been gathering data concerning an imbalance in its shareholder ledger and that its early findings suggested a number considerably higher than FINRA’s 2.65-million-share figure.
Next Bridge went further. The company said its investment banking firm had received several inquiries from financial institutions seeking to purchase Next Bridge shares to bring their books into balance. According to the letter, one such inquiry led to a call in which a Next Bridge representative learned of an acknowledged shareholder imbalance at a single financial institution that the company said was multiples greater than FINRA’s 2.65-million-share figure.
Next Bridge told FINRA there was a “significant disconnect” between the data it was gathering and FINRA’s reported figure and called for a more exhaustive review of shares across accounts and categories.
How was that discrepancy ultimately reconciled?
But that later regulatory estimate is not the same thing as the final ordinary short-interest report that the reporting system never produced.
Years later, FINRA proposed a rule specifically designed to address this type of situation:
When a symbol disappears before the next reporting date, capture members’ gross short positions as of the last settlement date on which the symbol still existed.
The rule wasn’t retroactive.
It wouldn’t have solved MMTLP.
But MMTLP demonstrates why the information can matter.
There is another notable piece of chronology. FINRA’s broader short-interest reform initiative began with Regulatory Notice 21-19 in June 2021 – more than a year before MMTLP. That notice contemplated numerous changes to short-interest and fail-to-deliver reporting. But the deleted-symbol final-report requirement was not among the proposals FINRA put out for comment at that time. The requirement appears in the 2026 proposal, after MMTLP had demonstrated exactly what can happen when a symbol disappears before the next short-interest reporting date. FINRA has not stated that MMTLP prompted the provision, and NakedShortStop™ does not assert that it did. But the chronology raises an obvious question: did MMTLP help expose the data gap FINRA later sought to close?
It is difficult to imagine a clearer real-world example of the question FINRA’s deleted-symbol provision was designed to address:
What was the final reported short position before the ticker disappeared?
What FINRA’s Conclusion Does – and Doesn’t Answer
FINRA’s position that it found no evidence of significant naked short selling deserves to be evaluated on the evidence supporting it.
That means asking what information FINRA examined — and what information remained outside its ability to independently reconcile.
The distinction is important because reported short interest, securities lending, fails to deliver, broker-dealer positions and beneficial shareholder entitlements are not interchangeable datasets.
One dataset cannot necessarily answer every question raised by another.
FINRA has also stated that the MMTLP corporate action did not require outstanding short positions to close and did not extinguish the obligations associated with those positions.
According to FINRA, broker-dealers adjusted outstanding MMTLP short positions into equal-sized short positions in Next Bridge, and any applicable Regulation SHO close-out obligations remained.
So NakedShortStop™ asks a narrower question:
If FINRA concludes that significant naked short exposure did not exist, what complete reconciliation of issued shares, broker-dealer positions and beneficial shareholder entitlements supports that conclusion?
This is not an assertion that FINRA’s conclusion is false.
It is a request for the accounting that would allow investors to independently understand why the conclusion is correct.
And that brings us back to the question at the center of the NakedShortStop™ MMTLP Special Report:
Where is the share count?
The 46% Question
Now return to 2025.
2,426 securities lost their symbols.
1,122 still had reported outstanding short interest at their last reporting date.
46%.
But those weren’t necessarily endpoint numbers.
There was an average eight-day gap before the final settlement date on which those symbols existed.
And FINRA itself acknowledged elsewhere in the same proposal that certain economically short arranged-financing obligations weren’t currently included in ordinary reported short interest.
So perhaps the important question isn’t:
Why did 46% have shorts?
Short selling itself is legal and common.
The more consequential question is:
What was actually outstanding when those securities disappeared?
And then:
Why shouldn’t there be a final record?
What We Know – and What We Don’t
We know FINRA identified deficiencies in its existing reporting system.
We know it called the deleted-symbol problem a “data gap.”
We know it proposed capturing certain economically short exposures not currently included in ordinary short-interest reporting.
We know it wanted more frequent short-interest data.
We know it wanted direct information identifying which correspondent broker-dealer had been allocated certain FTD close-out obligations.
We know at least one industry organization directly opposed the deleted-symbol reporting requirement.
We know SIFMA ultimately called for withdrawal or SEC disapproval.
And we know FINRA withdrew SR-FINRA-2026-012.
What the public record has not yet established is why FINRA ultimately chose to withdraw the entire proposal rather than amend it.
There may be a straightforward regulatory explanation.
FINRA may return with a revised proposal.
Other SEC reporting initiatives may have complicated implementation.
Industry concerns may have persuaded FINRA that reconsideration was appropriate.
But another question remains legitimate:
What role did industry resistance play in the decision to withdraw the proposal?
That question deserves an answer.
Editorial Analysis
For years, controversies surrounding naked short selling have repeatedly collided with the same fundamental problem:
Visibility.
Investors see one dataset.
Broker-dealers possess another.
Clearing organizations possess another.
Transfer agents maintain another.
Regulators receive still another.
And those datasets don’t necessarily answer the same questions.
SR-FINRA-2026-012 was important because FINRA itself acknowledged that gaps existed.
Some economically short positions weren’t captured by existing short-interest reporting.
FINRA wasn’t routinely receiving information identifying which member carried certain allocated FTD close-out obligations.
And when a ticker disappeared before the next short-interest reporting date, FINRA might never receive a final report showing the short positions existing at the end.
FINRA proposed closing those gaps.
Industry participants debated the costs, benefits, regulatory overlap and potential exposure of proprietary information.
Those are legitimate subjects for debate.
But so is this:
When a security disappears, why should its final short position disappear from view with it?
MMTLP shareholders have been asking their version of that question for years.
Where is the share count?
Perhaps MMTLP’s importance extends beyond determining what happened to one extraordinary security.
Perhaps it demonstrates something larger.
What happens when the market reaches the end of the story – but investors never receive the final page?
.
Primary Sources Reviewed
- SEC – SR-FINRA-2026-012: Original May 13, 2026 filing proposing amendments to FINRA Rule 4560 and new Rule 4321.
- SEC – SR-FINRA-2026-012 Rulemaking Docket: Official proceeding history, public comments, June 30 extension and August 5, 2026 withdrawal. The SEC page now explicitly identifies the proposal as “WITHDRAWN on 08/05/2026.”
- Financial Information Forum – June 8, 2026 Comment Letter: Objections including the deleted-symbol final-report requirement.
- SIFMA – June 18, 2026 Comment Letter: Request that FINRA withdraw the proposal or that the SEC disapprove it.
- Nasdaq – June 8, 2026 Comment Letter: Support for significant portions of the proposed reporting reforms.
- Managed Funds Association – June 2026 Comment Letter: Position on enhanced short-interest reporting and protection of proprietary information.
- Alternative Investment Management Association – June 2026 Comment Letter: Comments concerning the reporting framework and regulatory overlap.
- FINRA – MMTLP Corporate Action and Trading Halt FAQ
- Meta Materials Series A Preferred Shares
- FINRA – Supplemental MMTLP FAQ: FINRA’s 2.65-million-share estimate, short-position treatment, naked-short conclusion, reporting-date chronology and stated limitations concerning a comprehensive share-count review.
- Next Bridge Hydrocarbons – January 23, 2024 Letter to FINRA: Next Bridge’s formal notice to FINRA that its shareholder-ledger data indicated a significant discrepancy with FINRA’s 2.65-million figure, including what Next Bridge described as an imbalance at one financial institution alone that was multiples of that amount. The actual letter supports that characterization.