The Securities and Exchange Commission (SEC) has issued a Risk Alert to help market participants detect and avoid options trading that circumvents the SEC short-sale rule. The SEC short-sale rule, also known as Regulation SHO, requires short sellers who fail to deliver securities after the settlement date to close out their position immediately. The SEC’s Risk Alert aims to help market participants identify trading strategies that give the impression of satisfying Regulation SHO, when in effect they are evading it. Common indicators of an attempt to circumvent Regulation SHO include: trading exclusively in hard-to-borrow securities and continuous failure to deliver positions.