On April 14, 2010, the Securities and Exchange Commission (the “SEC”) proposed a new rule to establish a large trader reporting system. [1] The rule would require large traders of exchange-listed stocks and options (“NMS securities”) to register with the SEC and obtain a unique large trader identification number, which they would provide to their registered broker-dealers with every order.

The SEC would use the large trader identification numbers to collect information about the orders and transactions of large traders across broker-dealers, analyze their activity and monitor the impact of their trades on the markets. This information would also be used for enforcement purposes and to reconstruct trading activity following periods of unusual market volatility.

Registered broker-dealers would be required to keep records of large traders’ transactions, report this information to the SEC by close of business on the day of a request and monitor for compliance by putative large traders with the registration requirements. The information submitted to the SEC would be confidential and not subject to public reporting.

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