On October 3, 2011, Rule 13h-1 went into effect which, among other things, requires “large traders” to begin identifying themselves to the SEC on December 1st by filing Form 13H. Under Rule 13h-1, a “large trader” is defined as a person, including affiliated entities, whose discretionary transactions in NMS securities (a) equal or exceed 2 million shares or $20 million during any calendar day, or (b) 20 million shares or $200 million during any calendar month. A large trader must file a Form 13H with the SEC within 10 days after reaching either one of these thresholds.
Upon receipt of Form 13H, the SEC will assign to each large trader an identification number that will uniquely identify the trader, which the large trader must then provide to its broker-dealers. After an initial filing, a large trader must file Form 13H as follows:
- Within 45 days after the end of each full calendar year; and
- Promptly after the end of any calendar quarter during which time any of the information contained in the previously filed Form 13H becomes inaccurate for any reason.
Investment advisers and broker-dealers with discretionary authority over client assets may want to consider performing a review of trading activity over the last 12 to 24 months to determine whether they may fall under the definition of large trader, thus being required to make Form 13H filings. Should such firms determine that filings maybe necessary, the following additional steps should be considered:
- Implementing controls to capture aggregated transaction information going forward; and
- Establishing policies and procedures covering requirements and compliance with Rule 13h-1.
For additional information on or assistance with Form 13H, please contact Brent Cunningham, Associate Attorney by email at firstname.lastname@example.org by phone at (619) 298-2880.
 NMS Securities are defined as “any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.” This generally refers to the vast majority of publicly-traded securities in the U.S.