IT GRC Forum

FacebookJoin our Linkedin Group!Follow us on Twitter!Subscribe to our Feeds!
E-mail

SEC sets up large trader reporting system

July 27, 2011 - The Securities and Exchange Commission is pressing ahead with the creation of a system to collect transaction data from large traders such as banks and hedge funds that will help it to investigate wild stock market swings like last year's May 6 flash crash.

The SEC has voted unanimously for the large trader reporting regime, first proposed in April 2010 just before the flash crash. The crash saw the Dow Jones Industrial Average plummet in minutes but it took regulators months to piece together the events of the day and work out what went wrong.

"That day dramatically demonstrated the need to enhance the Commission's ability to quickly and accurately analyse market events," says Mary Schapiro, chairman, SEC.

The new rule requires large traders - those transacting two million shares or $20 million per day - to identify themselves to the SEC, which will then assign each a unique identification number.

This number will be provided to their broker-dealers, who will be required to maintain transaction records for each large trader and report that information to the SEC upon request.

Says Schapiro: "The large trader reporting rule will significantly bolster our ability to oversee the US securities markets in a time when trades can be transacted in milliseconds or faster. This new rule will enable us to promptly and efficiently identify significant market participants and collect data on their trading activity so that we can reconstruct market events, conduct investigations, and bring enforcement actions as appropriate."

The Commission is also putting together proposals for the development of a consolidated audit trail for equities and options - a system that would capture customer and order event information for many securities across all markets.

Says Schapiro: "I am hopeful that we will be able to move forward with that proposal in the very near term. I expect that a consolidated audit trail plan will build on and complement today's large trader rule, and avoid unnecessary duplication or undue burden on market participants."

Trackback(0)
Comments (0)add comment

Write comment

busy
 

Subscribe via Email

 Your Email: