Effective February 28, 2011, FINRA has reinstituted the “short sale exempt” marking for trade reporting in over-the-counter transactions. In addition, Order Audit Trail System (OATS) route reports must include, if applicable, price and a short exempt identifier. “Short sale exempt” indicators are used for short sales of stocks that may be marked “short exempt” under Regulation SHO. Relevant to the Series 7, Series 62 and Series 24 exams.
http://www.finra.org/Industry/Regulation/Notices/2010/P122255
The types of sales that qualify as short exempt may be found under Rules 201(c) and 201(d) of Regulation SHO: http://taft.law.uc.edu/CCL/regSHO/rule201.html#c.