Views on improving the integrity of global capital markets
17 November 2020

Proposed 13F Rule Change Reduces Transparency, May Lack Authority

With the proposed rule, Reporting Threshold for Institutional Investment Managers, the Securities and Exchange Commission (SEC) is seeking to raise the asset threshold for investment managers to report their holdings under Rule 13F from $100 million to $3.5 billion. 

This change would exempt nearly 90 percent of current filers, totaling more than 4,500 institutional investment managers with $2.322 trillion in reported assets. (The SEC notes that nearly 91 percent of the dollar value of the reported assets would continue to be reported.)

CFA Institute voiced its opposition in a comment letter submitted to the Commission on 29 September from James C. Allen, CFA head, Capital Markets Policy; and Stephen Deane, CFA, senior director, Capital Markets Policy. 

Diminishing Transparency

In our comment letter to the SEC, we argued that such a drastic change would reduce transparency and investor confidence. Investors use 13F holdings disclosures for a variety of purposes, from tracking crowded trades to performing due diligence on smaller investment managers. Public companies use the data to identify an important segment of their shareholder base and to engage in shareholder dialogue. Academics use the data for research that helps to inform markets and regulators.

Authority in Question

We also questioned the SEC’s authority to raise the reporting threshold, because the enabling statute appears to give the SEC authority only to lower it. We also noted the contrast from the SEC’s recent approach used in a separate rule, which made no change to the financial thresholds in the accredited investor definition, designed to protect individual investors. In our view, those are the thresholds in need of updating given that they have been eroded by nearly four decades of inflation.

Media coverage

Opposition to this change from CFA Institute and other respected financial organizations received wide media pickup, including in Bloomberg Law among others.

About the Author(s)
Stephen Deane, CFA

Stephen Deane, CFA, is Senior Director, Capital Markets Policy, the Americas, at CFA Institute. Stephen also serves as Chair of the Markets Advisory Council of the Council of Institutional Investors. He joined CFA Institute in 2020 after more than nine years at the US Securities and Exchange Commission (SEC). He worked in the SEC Office of the Investor Advocate since its inception in 2014, where he helped to build out the office and served as principal liaison to the Investor Advisory Committee. He previously worked at MSCI, Institutional Shareholders Service (ISS), and in international development. He speaks fluent Russian and has a master’s degree in Russian studies from Harvard University.

1 thought on “Proposed 13F Rule Change Reduces Transparency, May Lack Authority”

  1. Victor Kamendrowsky says:

    Thank you for the high quality of most of your posts.

Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.