SEC proposed large trader reporting system to protect investors
14 April 2010
The SEC is proposing that large traders be required to identify themselves to the Commission, which would then assign each trader a unique identification number. Large traders would provide this number to their broker-dealers, who would be required to report transaction records to the SEC.
The Securities and Exchange Commission voted to propose the creation of a large trader reporting system that would enhance its ability to identify large market participants, collect information on their trades, and analyze their trading activity.
The SEC is proposing that large traders be required to identify themselves to the Commission, which would then assign each trader a unique identification number. Large traders would provide this number to their broker-dealers, who would be required to maintain transaction records for each large trader and report that information to the SEC upon request.
The SEC's proposal is the latest in an ongoing effort to promote fairness and efficiency in the markets. Other rules proposed recently to increase fairness and efficiency include a proposed ban on marketable flash orders, a proposal to bring greater transparency to dark pools of liquidity, and a proposal to prohibit unfiltered access to markets.
"This rule is designed to strengthen our oversight of the markets and protect investors in the process," said SEC Chairman Mary L. Schapiro. "It would give us prompt access to trading information from large traders so we can better analyze the data and investigate potentially illegal trading activity."
Under the SEC's proposal, traders who engage in substantial levels of trading activity would be required to identify themselves to the SEC through a filing with the Commission. A "large trader" would be generally defined as a firm or individual 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.
Public comments on the proposal should be received by the Commission within 60 days after its publication in the Federal Register.
What's Next?
The Commission will seek public comment and data on a broad range of issues relating to the large trader reporting system, including the costs and benefits associated with the proposal. After careful review of comments, the Commission will consider any further action to take on the proposal.
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