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A new rule proposed by the SEC this summer would raise the Form 13F reporting threshold for investment managers from $100 million to $3.5 billion.
The Securities and Exchange Commission issued the proposed rule for investment managers – including non-U.S. investment managers and investment advisers – on July 10 with a 60-day public comment period.
The threshold would increase significantly, from its current level of $100 million to $3.5 billion in Section 13(f) securities, effectively eliminating Form 13F filing requirements for approximately 90% of managers (SEC estimate), while retaining disclosure for over 90% of the dollar value of the holdings data currently being reported.
SEC rationale for the increase
In short, the SEC determined that a “Stock Market Growth” model better reflects the original intent of the 13(f) disclosure program as it would apply only to the managers whose holdings of section 13(f) securities are proportionally large relative to the size of the U.S. equities market in total. Such a model adjusts the reporting thresholds based on growth in the stock markets from the time of the adoption of the reporting requirements. The SEC also pointed out that the legislative history clearly indicates that the 13(f) reporting threshold was designed to focus on larger managers.
Practical note
While the SEC collects and analyses 34 specific requests for comment regarding this proposal, it is important to note that managers exceeding the current reporting threshold of $100 million must continue to file Form 13F until the proposal is adopted and effective. If you have any questions or concerns, please contact a member of our team.
How Ocorian can help
We help clients with a range of regulatory reporting, including helping with calculations and filing. We can help you understand the implications of the rule change for your firm and review your methodology around Form 13F. We can also work with you to review your policies and procedures and make sure your operational staff have appropriate training.
