SEC proposes large trader reporting system

Abstract

Purpose

The purpose of this paper is to describe the Securities and Exchange Commission's recently proposed new rules to establish a large trading reporting system.

Design/methodology/approach

The paper provides an overview of the new Rule 13h‐1, which, if adopted, would require large traders to identify themselves to the SEC and to be issued a “Large Trader Identification Number”. It outlines the proposed definition of a large trader and describes how a large trader would report itself to the SEC and the broker‐dealers it uses to effect trades using a new Form 13H. The paper also provides detailed guidance to broker‐dealers regarding their books and records obligations under the proposed rule.

Findings

The proposed new rule and form are intended to provide the SEC with data to facilitate its ability to assess the impact of the trading activity, to reconstruct trading activity following periods of unusual market volatility, and to analyze significant market events for regulatory purposes. Registered broker‐dealers would also be under an obligation to maintain records of transactions effected in accounts identified to it as large trader accounts; electronically report large trader transaction information to the SEC upon request; and monitor compliance with the new rule.

Originality/value

The paper provides practical guidance from experienced securities lawyers regarding an important proposed change.

Citation

Sacks, R.D. and Blankenship, M.J. (2010), "SEC proposes large trader reporting system", Journal of Investment Compliance, Vol. 11 No. 3, pp. 8-13. https://doi.org/10.1108/15285811011082188