SEC to Require Large Funds to Register
August 1, 2011
The Securities and Exchange Commission voted unanimously Tuesday to require large traders to register and to share more information. The rule, yet another measure in response to the Flash Crash of May 2010, will take effect in 60 days, with traders given an additional two months to begin registering.
The rule will apply to investors that trade more than two million shares or $20 million a day, or 20 million shares or $200 million a month. The SEC will assign such traders a unique identification number that they will have to share with their broker-dealer, which will maintain transaction records for these traders.
The SEC also proposed creating a unified audit trail so that regulators have one set of data to reconstruct market events.
"May 6 dramatically demonstrated the need to enhance the SEC's ability to quickly and accurately analyze market events," said SEC Chairman Mary Schapiro. "The large trader reporting rule will significantly bolster our ability to oversee the U.S. securities markets in a time when trades can be transacted in milliseconds or faster."
FINRA Warns Investors
About High-Yield Risk
FINRA has a message for investors considering lesser-understood investments as an alternative to traditional fixed-income and equity investments: caveat emptor.
Investments such as structured products, high-yield bonds and floating-rate loan funds hold the promise of high returns. And they may seem welcome alternatives at a time when stocks are volatile and fixed-income is paying paltry yields. But they should be approached with caution, FINRA advises. "Investors should never make an investing decision solely by looking at an investment's return, whether past or projected," said Gerri Walsh, FINRA VP for investor education. "Higher returns come with higher risk."
FINRA's alert was prompted by significant recent inflows into riskier investments. High-yield bond funds had $75 billion in new sales in 2010. Floating-rate fund inflows grew from $15 billion in 2008 to $60 billion in April 2011, and sales of structured products increased from $33 billion in 2009 to $54 billion in 2010.
Vanguard Group to Extend
Low Fees to Six Funds
Vanguard Group is extending its Admiral low-cost shares to six additional domestic equity index funds, with fees ranging from 0.10% to 0.21%. "The introduction of additional Admiral Shares is another example of our long-term commitment to reduce the cost of investing for our clients," said Bill McNabb, chairman and CEO of Vanguard. Vanguard first introduced the Admiral Shares in 2000 and in 2010 lowered the account balance minimums to qualify for the lower-cost shares from $100,000 to $10,000.