SEC Adopts New Rule On Large Trader Reporting System
Mondaq Business Briefing › United States Law Articles in English (2011)
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SEC Adopts New Rule On Large Trader Reporting System
I. Introduction
On July 26, 2011, the Securities and Exchange Commission (the "SEC") adopted Rule 13h-1 under the Securities Exchange Act of 1934 (the "Exchange Act") to require large trader registration and reporting.1 The rule requires persons who directly or indirectly exercise investment discretion and purchase or sell more than a specified amount of U.S.-listed stocks and options through a registered broker-dealer ("NMS securities")2, to register with the SEC as large traders. The SEC will use the large trader identification numbers ("LTID") to collect information about the orders and transactions of large traders across broker-dealers, analyze their activity, and monitor the impact of their trades on the markets. This information also will be used for enforcement purposes and to reconstruct trading activity following periods of unusual market volatility. Under the new rule, registered broker-dealers must comply with recordkeeping, reporting and monitoring requirements with respect to registered large traders and persons who such broker-dealers know or have "reason to know" are large traders. The information that the broker-dealers submit to the SEC under these requirements is confidential and not subject to public reporting. Registered broker-dealers are also required to enhance their recordkeeping and reporting capabilities (using the existing Ele...See the full content of this document
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