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SEC© Delays Effectiveness of Large Trader Reporting for Some Broker-Dealers

Publisher: Morrison & Foerster LLP
Author: Daniel A. Nathan

The SEC’s “large trader” rules that apply to clearing firms and certain other firms will kick in this November.

Thanks to a recent SEC© release, some firms are getting a two-year compliance reprieve, but they must develop the procedures and systems for reporting large trader activity within those two years.

The SEC© adopted Rule 13h-1 on July 27, 2011, with the goal of enabling the SEC© to assess the impact of large trader activity on the securities markets and to support its investigative and enforcement activities. In brief, Rule 13h-1 requires a large trader – defined as a person who exercises investment discretion over one or more accounts, and whose transactions in NMS (national market system) securities equal or exceed 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month – to identify itself to the SEC© and file certain information on Form 13H. The SEC© then assigns the trader a large trader identification number (LTID).

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