As reported by Forbes’s Timothy Spangler, the Securities and Exchange Commission (SEC) today adopted a new rule establishing large trader reporting requirements, in an effort to improve their ability to identify high-frequency trading by large market participants.
Under the new rule, large traders will need to identify themselves to the SEC, and each trader will be a unique identification number, which will need to be provided to each broker-dealers that they use. The broker-dealers are required to maintain transaction records for each large trader and report that information to the SEC upon request. The new rule will enable the SEC to promptly and efficiently identify significant market participants and collect data on their trading activity so that the regulator can reconstruct market events and conduct investigations.
The new rule has two primary components: (a), it requires large traders to register with the SEC through a new form, Form 13H, and (b) it imposes recordkeeping, reporting, and limited monitoring requirements on certain registered broker-dealers through whom large traders execute their transactions. The need for the SEC to have better access to information is heightened by the fact that large traders , including high-frequency traders, are believed to be playing an increasingly prominent role in the securities markets.