The SEC recently adopted new Rule 13h-1 to bolster its ability to quickly and accurately analyze market events, collect securities trading data, and enhance the SEC oversight of U.S. securities markets. This new Rule, effective October 3, 2011, requires firms engaged in substantial trading activity to identify themselves to the SEC and report certain trading activity. Key requirements of the new Rule include the following:

• Large traders will need to identify themselves to the SEC by registering on a new Form 13H, which will then assign each trader a unique identification number.
• Large traders will provide this number to their broker-dealers, who will be required to maintain transaction records for each large trader and report certain trading information to the SEC upon request.
• Large traders will be defined as a person whose transactions in exchange-listed 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.
• The Rule imposes recordkeeping, reporting and limited monitoring requirements on certain registered broker-dealers through whom large traders execute their transactions.
• Large traders will have 2 months after the effective date of October 3, 2011 to comply with the identification requirements of Rule 13h-1. Broker-dealers will then have 7 months after the effective date to comply with their requirements.

View SEC final rule release

FrontLine Compliance, LLC is a regulatory compliance consulting firm of former high-level regulatory insiders offering customized services to investment advisers, broker-dealers, hedge funds, private equity firms, investment companies, and insurance company affiliates. Staffed by former SEC and FINRA regulators, and chief compliance officers, FrontLine Compliance provides the kind of industry knowledge, experience and expertise on regulatory issues only available from well-seasoned insiders. For more information about the firm, please visit www.frontlinecompliance.com.

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