“The collection of this information is particularly important given the increasingly prominent role played by very active market participants, including high-frequency traders,’’ Mary Schapiro, the SEC’s chairwoman, said before the vote.
The system, which would monitor firms that execute $20 million of equities a day or $200 million in a month, gives the SEC access to nonpublic data maintained by the traders’ broker-dealers, who would have to provide it upon request. After the rule takes effect in about two months, about 400 large traders would have to identify themselves within 60 days, and broker-dealers would have to begin maintaining transaction records within seven months, according to the SEC.
Broker-dealers will be responsible for most of the costs of tracking the data and reporting it to the SEC. The agency estimates a $35 million upfront cost for the industry and about $17 million a year to comply.
The idea, which had been proposed and rejected twice before, is a more limited reporting system than the SEC’s ongoing project to set up a so-called consolidated audit trail. That system is expected to provide a complete, real-time picture of what the market is doing.
The SEC’s rule should have been a “coordinated effort with the development of the Consolidated Audit Trail,’’ Randy Snook, executive vice president at the Securities Industry and Financial Markets Association, said in a statement.
The Wall Street trade organization encourages regulators “to adopt rules that create universal standards that are not duplicative,’’ Snook said.
In a separate 5-to-0 vote, SEC commissioners voted to adopt a rule cutting credit ratings from eligibility requirements for firms seeking fast-track approval for securities offerings.
