U.S. regulatory reporting looks like it is going to have its first major change in a long while, noting the shareholding disclosure rules are more than five decades old!
Securities and Exchange Commission Chairman Gary Gensler is considering speeding up the deadline for investors to alert the market when they amass an ownership stake of more than 5% of a company’s stock.
The rule, which is more than five decades old, may not reflect the rapidity of current markets and technologies,” Gensler said. Stock trading has moved from paper tapes to electronic trading, from wire to phone calls and faxes and now to mobile app. The time taken to buy and sell stocks has shifted from days to hours to minutes to now instantaneous executions and yet the disclosure rule in the U.S. hasn’t kept up with the times. T plus 2 shareholding disclosure requirement is common in many countries. Will the US now leapfrog them to T plus 1?
“Proponents of a rule change argue that knowing about the involvement of an activist could affect an individual investor’s decision to hold the stock“.
Investors, who hold a stake in a public company above the 5% threshold and plan to be active, or press for corporate change, file a form known as a 13-D. Such filings can boost a company’s shares as investors anticipate a major change sought by a large shareholder, such as board seats, a stock buyback, or the sale or breakup of the company.
Artius Global Shareholding Disclosure (AGSD) is flexible and can easily be updated with the latest rules. And, it can handle disclosure of intra-day positions.
“The rule, which is more than five decades old, may not reflect the rapidity of current markets and technologies,” Gensler said.