The SEC proposes a significant increase in the 13F reporting threshold from US$100 million to US$3.5 billion.
On July 10, 2020, the US Securities and Exchange Commission (SEC) released a proposed rule amendment to increase the Form 13F reporting threshold from US$100 million to US$3.5 billion. An institutional investment manager (Manager) is currently required to file a Form 13F on a quarterly basis if the Manager exercises investment discretion over accounts of certain equity securities with an aggregate fair market value of at least US$100 million on the last trading day of any month, a number that has continued to look smaller and smaller since the adoption of the threshold in 1975. The SEC has explained that the proposed threshold increase to US$3.5 billion is proportionate to the growth of the US equities market since that time. The SEC has estimated that 89.2% of current 13F filers would no longer be required to make such filings based on this threshold increase. At the same time, the SEC explained that, since most reported holdings are currently held by large Managers, the increase of the threshold to US$3.5 billion would retain disclosure of 90.8% of the dollar value of Form 13F holdings currently reported.
The SEC also proposed that, going forward, it will review the dollar threshold every five years to determine whether it is still appropriate and will propose an adjustment to the threshold when applicable.
The amended rule would also contain a number of other, less substantial changes to the current Form 13F reporting regime as listed below:
- The current “omission threshold” that allows Managers to omit holdings of less than 10,000 shares or US$200,000 principal amount of convertible debt securities will be eliminated, such that Managers will be required to report all filings even if at de minimis levels.
- The instruction for confidential treatment requests (CTRs), whereby Managers can request to temporarily withhold disclosure on the basis that such disclosure would be premature and likely result in substantial harm to the Manager’s competitive position, will be revised in line with the US Supreme Court’s June 2019 decision in Food Marketing Institute v. Argus Leader Media to require the Manager to demonstrate that the information is both customarily and actually kept private by the Manager and show how the release of the information could cause harm to the Manager.
- Certain other minor changes to the information required in Form 13F, and how the information will be presented.
The SEC is requesting comment on all aspects of the proposed rule amendment for a period of 60 days following publication in the Federal Register.