The Investment Dealers Association today issued a notice informing brokerage firms that they must comply with the U.S. Securities and Exchange Commission’s new rule against naked shorting.

The new rule, known as Regulation SHO, took effect September 7. It requires short sellers in all equity securities to locate securities to borrow before selling, and also imposes additional delivery requirements on broker-dealers for securities in which a substantial number of failures to deliver have occurred. Regulation SHO also defines ownership of securities, specifies aggregation of long and short positions, and requires broker-dealers to mark sales in all equity securities “long”, “short,” or “short exempt”.

“It is our expectation that members trading directly or indirectly on SEC regulated markets will adjust their trading practices to comply with this rule,” the IDA says. The regulator warns that failure to comply with this rule may be considered to be engaging in a “conduct or practice that is unbecoming or detrimental to the public interest” under IDA rules.