He is referring to the Reg Sho requirement of naked shorts failing to cover within the 3 day timeframe.
Regulation SHO is a regulation implemented on January 3, 2005, that seeks to update legislation concerning short sale practices. Regulation SHO established "locate" and "close-out" standards that are primarily aimed at preventing the opportunity for unethical traders to engage in naked short selling practices.May 14, 2018