NEW YORK, Aug 25 (Reuters) - A U.S. appeals court on

Monday ordered the U.S. Securities and Exchange Commission to

assess the economic impact of President Joe Biden-era rules

aimed at boosting transparency of short sell trades, in a

partial victory for hedge funds that brought the case.

The future of the rule is unclear. The review will now fall

to the SEC's new leadership, led by Trump's Republican SEC chair

Paul Atkins.

In December 2023, three hedge fund associations sued in the

5th U.S. Circuit Court of Appeals to vacate the rules adopted

earlier that year, arguing they could reveal confidential

trading positions and potentially invite retaliation. Short

sales are trades that stand to profit when a stock falls.

The groups also argued the rules violated the Administrative

Procedure Act, which requires agencies to justify their rules

and consider feedback.

On Monday, a three-judge panel rejected the argument that

the rules would expose confidential investor positions, but it

did require the SEC to assess the costs and benefits of the

rule.

The petitioners, the National Association of Private

Fund Managers, Managed Funds Association (MFA), and Alternative

Investment Management Association (AIMA), also said the rule

exceeds the SEC's authority, but the court did not agree with

that.

In a statement, Bryan Corbett, CEO of the MFA, the group

which led the litigation, cheered the ruling.

"These regulations were fatally flawed from the start when

the SEC adopted highly related rules on the same day without

analyzing the impact one would have on the other," he said.

The SEC did not immediately comment on the ruling.

The associations have sued to overturn new rules the SEC

adopted in 2023 under chair Gary Gensler, with the groups

scoring some victories.