Large Trader


DEFINITION of 'Large Trader'

An investor or organization with trades that are equal to or in excess of certain amounts as specified by the United States Securities And Exchange Commission (SEC). A large trader is defined by the SEC as "a person whose transactions in NMS securities equal or exceed 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month." Any market participant who is, by definition, a large trader must identify himself or herself to the SEC and submit Form 13H, "Large Trader Registration: Information Required of Large Traders Pursuant To Section 13(h) of the Securities Exchange Act of 1934 and Rules Thereunder."

BREAKING DOWN 'Large Trader'

As of 2011, the SEC requires that all traders who execute a substantial amount of trading activity, as measured by volume or market value, identify themselves to the SEC by registering with the SEC through Form 13H. The SEC assigns each large trade an identification number, and collects information and analyzes each large trader's trading activity. In addition, certain registered broker-dealers are required to adhere to SEC rules regarding recordkeeping, reporting and monitoring of large traders who execute transactions through the broker-dealer.

The SEC initiated large trader reporting in response to the development of trading technology that enables trading in substantial volumes and fast execution speeds. In addition, the SEC cited the rising prominence of large traders and high-frequency traders (HFTs) in the markets and the need to have improved access to their trading activity.

Large trader reporting is intended to help the SEC identify individuals engaged in significant market activity in order to analyze their market activity and determine the impact of their trading activity.

Large traders must submit an "Initial Filing" through Form 13H and an "Annual Filing" for each applicable calendar year. A previously identified large trader who has not conducted the identifying amount of trading activity as measured by volume or market value may file for an Inactive Status, and can remain inactive and exempt from the filing requirements until the large trader trading level is made again.

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