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SEC to impose new reporting rules on biggest traders

Published:Wednesday | July 27, 2011 | 12:00 AM

Large traders will be required to register with the government and make available more information about their trades under a rule adopted by federal regulators Tuesday.

The US Securities and Exchange Commission agreed unanimously on the rule, which takes effect in 60 days.

Large traders will have an additional two months to register with the SEC after the rule takes effect.

The rule is part of the SEC's response to the May 2010 "flash crash," when the Dow plunged more than 600 points in five minutes before recovering most of the losses. Regulators say tracking large trades will make it easier to understand unusual activity in the market.

The SEC already has approved 'circuit breakers' that would pause trading if a stock's price changed too quickly, and it has clarified when trades involving temporarily distorted prices can be cancelled.

The SEC also has proposed creating a unified audit trail that would give regulators one set of data to reconstruct market events.

The information currently is kept in different formats and in numerous locations. The SEC said the staff is working on the details of the rule.

The rule approved Tuesday applies to investors who trade more than 2 million shares or US$20 million a day. It also applies to investors who trade 20 million shares or US$200 million a month.

The SEC approved two other rules on Tuesday. One reduces companies' reliance on credit ratings when offering new shares.

The other requires companies selling complex bonds to provide more information about the loans backing those bonds.

- AP