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January 01, 2012 at 07:00 AM
Just when you thought there couldn’t be any more forms to complete, we have yet another one from our friends at the SEC—the new Form 13H. There is a question on the new SEC exam regarding “compliance budgets.” Query—how can any advisor maintain a realistic compliance budget if regulators keep propounding new forms and requirements?
My colleagues, Steve Galletto and Matt Jacobs, recently had an opportunity to conduct a national seminar on this issue, and I asked them to summarize the new rule for our readers.
The “Large Trader Rule,” Rule 13h-1, collects information on U.S. securities market participants involved in large volume value trading. It became effective on Oct. 3, 2011. The Large Trader Rule requires that all qualifying market participants, including investment advisors, file a Form 13H. The filing will generate an identification number that shall be used to monitor trading activity. By imposing a self-identifying requirement on qualifying market participants, the Large Trader Rule has created a valuable data source and tracking system for trading activity.
The Large Trader Rule identifies qualifying market participants, or “large traders,” as any person or entity, including investment advisory firms, that effect transactions in exchange-listed securities through a broker-dealer on a discretionary basis in an aggregate amount equal to or greater than either two million shares or $20 million in a single day, or 20 million shares or $200 million in a calendar month. The rule also requires that market participants who fit the definition of a large trader self-identify by filing Form 13H electronically through the EDGAR system.
