Proposed Amendment to 13F – What This Really Means?

The SEC released a proposed amendment to Form 13F on July 10 to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the Commission adopted Form 13F over 40 years ago.

New Proposed Reporting Threshold:

The proposal would raise the reporting threshold to $3.5 billion from the current $100M threshold – which would reflect proportionally the same market value of U.S. equities that $100 million represented in 1975, when 13F was first adopted. The new threshold would retain disclosure of over 90% of the dollar value of the holdings data currently reported while eliminating the Form 13F filing requirement and its attendant costs for the nearly 90% of filers that are smaller managers. In addition, since the initial 13F thresholds were established in 1978, the Commission has added other data collection tools, including N-PORT.

Other Proposed Changes:

  • SEC would review threshold every five years and make recommendations, if any, to the Commission.
  • Eliminate option to not report “de minimis” positions. (i.e. both less than 10k shares and less than $200k value). All positions would be required to be listed.
  • Managers would also be required to report additional numerical identifiers to enhance the usability of the information provided on the form; and
  • amend the instructions relating to requests for confidential treatment of Form 13F information.

Substantial Reduction in Visibility – Disagreement among SEC Commissioners:

SEC Commissioner Allison Herren Lee issued a public statement voicing opposition when the proposed changes were announced. In her statement, Commissioner Lee noted that the change in reporting threshold would substantially reduce visibility into portfolios controlling $2.3 trillion in assets and eliminate access to information about discretionary accounts managed by more than 4,500 institutional investment managers.

Among the critiques, Commissioner Lee disputed the SEC’s ability to raise the threshold at all as a matter of law (a plain reading of the Rule enacted by Congress specifically permits the SEC to lower the threshold, but does not grant similar authority to raise it. see section 13(f)(1).)

Timeline:

The proposal will be published in the Federal Register, followed by a 60-day comment period. Possible to see a Final Rule before year-end, but not certain.

Adoption:

We expect to see a lower threshold than the proposed $3.5B, when a final Rule is adopted. Under the current proposal, 90% of filers (i.e. more than 4,500 institutional investment managers) would no longer be subject to reporting.

CSS will be monitoring public commentary as its posted during the 60-day comment period and will continue to update on likelihood of passage as this plays out. For more information or to speak with our regulatory experts, email us at: info@cssregtech.com


Subscribe to CSS Blog

CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

Latest Content

Time to Use the Bat Phone: Who to Call When a Compliance Officer Needs Help?

It seems that the burden of work continues to increase for compliance professionals in the investment management industry. While also ensuring that their compliance program is effective, compliance officers must also be aware of cybersecurity threats, business continuity plans, new regulations, changes in business strategy, and more – all while doing this under a work … Continued

Texas Outlaws and a Silver Bullet: Position Limits in the USA

In this first installment on position limits, Regulatory Guidance expert Greg Hotaling surveys the current landscape of position limits imposed for U.S.-listed commodity derivative holdings, which can affect investment firms and other speculative investors regardless of where they are based. Stay tuned for coverage of EU position limits in the next edition. “Who shot J.R.?!” … Continued

FAQs From the Cyber Desk

Cybersecurity is a fast-moving target, so it is not uncommon for firms to have questions when it comes to assessing and understanding their cybersecurity risks. Here at CSS we receive a lot of cybersecurity questions, so we thought we would take the time to answer 10 of the most common Frequently Asked Questions. (1) What … Continued