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News October 3, 2011 Issue

Large Trader Reporting Rule Effective

Some firms won’t even have to look, they know they’re in. Others will pore through the carve-outs hoping to fall below the line.

If your firm has discretionary authority to conduct trading in equity securities over certain thresholds, beginning today you have new monitoring and reporting obligations.

October 3 marks the effectiveness of the SEC’s new Rule 13h-1, the Large Trader Reporting Rule.

Initial Form 13H filings under the rule are not due until December 1. Afterward, and in general, initial filings on Form 13H must be made "promptly" after trading activity over the thresholds occurs. The SEC said in the rule’s adopting release that, for the purposes of Rule 13h-1 only, "promptly" means within ten calendar days after the triggering transactions occur. In the period after November 21, SEC sources have confirmed the ten-day window of "prompt" filing will apply. This means, for example, that triggering activity on November 25 would require an initial Form 13H filing on or before December 5.

Broker-dealers have until April 30, 2012 to develop and implement systems to monitor and report large trader activity.