The SEC has proposed Rule 13h-1 under the Securities Exchange Act of 1934 (the “1934 Act”) which would establish a large trader reporting system under Section 13(h) of the 1934 Act. The proposed rule is designed to enable the SEC to identify, and obtain certain baseline trading information about, traders that conduct a substantial amount of trading activity. The proposal would affect traders whose transactions in NMS (national market securities) equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million in any calendar month (“Large Traders”). Large Traders would be required to identify themselves to the SEC and the broker-dealers they use, and make certain disclosures to the SEC on proposed Form 13H. Broker-dealers would be required to (a) maintain transaction records for each Large Trader which would be subject to SEC review, and (b) monitor customer activity for compliance with the reporting requirements of Rule 13h-1. Comments on the proposal are due 60 days after its publication in the Federal Register.
Alert April 20, 2010