SEC’s Proposed 13F Rule Change Would Decrease Market Transparency, but Reduce Regulatory Burdens
Posted on 07/20/2020
The U.S. Securities and Exchange Commission (SEC) proposed to increase the filing threshold for Form 13F to US$ 3.5 billion from the threshold of US$ 100 million. This has drawn some anger among investors who track these quarterly ownership filings. Simply put, the threshold for filing a Form 13F will now fall on those with US$ 3.5 billion or more. Form 13F data reveals investment exposure, performance, and risks. The disclosure rule was first written in 1975, when the US$ 100 million threshold made up 75% of the U.S. dollar value of all institutional equity holdings. The threshold has never been changed since its inception. The SEC believes it is going back to the true intention of the ruling with a revised US$ 3.5 billion threshold.
Washington D.C.-based legal firm Akin Gump Strauss Hauer & Feld (Akin Gump) has noted a change in regulatory requirements on July 10, 2020 estimates that nearly 90% of current filers will no longer need to complete a 13F, because their collective market value only represents 10% of the value of 13F filers.
Allowing smaller offices to avoid the form will take away some of their regulatory burden. The average estimate of the total cost involved in smaller firms complying with 13F requirements is US$ 100 million, and this is a general estimate of the amount that will be saved. The change will be subject to a comment period of 60 days.