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SEC reportedly scraps changes to 13-F filings

Neudata News
29 Oct 2020

The US Securities and Exchange Commission has reportedly backed down from its proposal to reform 13F filing requirements, which would have reduced the number of funds required to report their equity holdings each quarter.

On Tuesday, Bloomberg reported that the proposed rule — which would have raised the threshold for reporting requirements from firms that hold USD 100m of relevant securities to only those that hold USD 3.5bn worth — was dead in the water, citing unnamed sources.

The proposed changes, which were announced in July, faced nearly universal resistance from the industry and were widely expected to be dropped. Among its detractors were data vendors that rely on public filings data to produce their datasets and public companies that use 13Fs to see who their shareholders are and fend off activist investors.

But some hedge funds, who the change was designed to help, also voiced their disapproval. Although firms are not required to disclose their quarterly holdings until up to 45 days after the end of the quarter (which means the information can be outdated and less valuable), asset managers still use public filings to monitor investor sentiment and the crowdedness of individual positions across the industry.

Even hedge fund lobbying organisations, including the Alternative Investment Management Association and Managed Funds Association, found fault with the proposal. In a letter to the SEC, Jiří Król, deputy CEO of AIMA, said the SEC had not “fully considered the potential negative impacts raising the Form 13F threshold would have on corporate issuers, researchers, analysts and indeed, other institutional investment managers.” A letter from MFA’s Mark Epley and Benjamin Allensworth also added that the proposal would result in a “relatively small amount of direct cost savings” that could be contrasted with the “increased costs associated with the loss of information.”

The proposal would have reduced the number of firms required to disclose their holdings by nearly 90%, from 5,089 to 550.

The SEC was reportedly surprised at the widespread resistance to the proposal, Bloomberg reported. During its public comment period, the regulator received over 2,000 letters opposing the change and only 24 supporting the proposal.


Photo by JJ Ying on Unsplash