The SEC has adopted a new rule and form requiring large traders to register with the SEC and imposes recordkeeping, reporting and monitoring obligations on their broker-dealers.  Under new Rule 13h-1, a "large trader" will be defined as "a person whose transactions in exchange-listed securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month."  Each large trader must file new Form 13H and obtain a unique large trader identification number for use with its broker-dealer.  Each BD must maintain and report trading information to the SEC with respect to large traders similar to the information currently required by the EBS system.  The Rule also requires BDs to monitor its customers to determine whether they should file as large traders.  The Rule becomes effective 4 months after publication for large traders and 9 months for broker-dealers.

 

OUR TAKE: This new rule applies to both the buy side (i.e. investment advisers) and the sell side.  While the information should not be particularly controversial, the compliance requirements could be burdensome.