The SEC has enacted a "large trader" reporting rule requiring both foreign and domestic persons or entities employing such persons, including investment advisers, to register with the SEC via Form 13H and obtain a Large Trader Identification Number (LTID) if you are a "Large Trader" as defined by the rule. Once obtained, you are required to provide the LTID to Aufhauser Securities Inc. and indicate to which account(s) it is applicable.
In light of the rapid development in trading technology and strategies, the SEC has been conducting an in-depth review of the changes to the structure of the U.S. markets. Because of these changes, the SEC is exercising its authority under Section 13(h) of the Securities Exchange Act of 1934 to establish the Large Trader Reporting Rule.
"Large Trader" is defined as a person or entity who, directly or indirectly, through the exercise of "Investment Discretion," effects transactions in exchange-listed equities and options that equal or exceed 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million over the course of any calendar month.
Investment Discretion is defined broadly to include all types of discretion involving decisions to buy or sell exchange-listed equities or options. Large Trader status applies to the adviser or agent having trading discretion over an account - not to the account or to the beneficial owner of the account if they are not the party exercising investment discretion.
The Large Trader Rule applies to any type of agent having Investment Discretion over an account, including broker-dealers, and requires each Large Trader to register if the defined trigger levels are met. Large Traders include regulated and unregulated entities as well as domestic and foreign persons. Individuals trading for their own account or for an LLC or other entity holding their own assets are also subject to the registration requirements of the Rule. Also note that for the purpose of determining the value of shares traded, each option contract is assumed to be equal to 100 shares of its underlying security (or other share equivalent, if adjusted by OCC).
Dollars traded = option contracts traded * option multiplier (typically 100) * the market price of the options.
Ex., If ABC has a multiplier of 100, a person who purchased 200 ABC call options for $400 each would have effected an aggregate transaction of $8 million (i.e., 200 * 400 * 100 = $8,000,000).
Getting an Identification Number: After a large trader submits a Form 13H to the SEC, they will be assigned a Large Trader Identification Number (LTID). A large trader will be required to disclose to its broker-dealers its LTID and indicate to which accounts the LTID applies. This disclosure requirement applies not only to broker-dealers that carry the accounts (including prime brokers and clearing brokers) but also to executing brokers, such as Aufhauser Securities, Inc.
Recordkeeping, Reporting, and Monitoring: The rule requires broker-dealers to maintain and report data when requested by the SEC. In addition, the rule requires broker-dealers to monitor whether their customers meet the threshold levels that define a Large Trader (based on transactions handled at the broker-dealer) in order to encourage compliance with the requirement for customers to identify themselves as Large Traders to the SEC.
Large Trader Form 13H filings are not accessible to the public. All registration information provided to the SEC by large traders is confidential and is also exempt from disclosure under the Freedom of Information Act.
www.sec.gov/rules/final/2011/34-64976.
http://www.sec.gov/divisions/marketreg/large-trader-faqs.htm