What is Large Trader?

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A large trader is an investor or organization with trades that are equal to or exceed certain amounts as specified by the Securities and Exchange Commission (SEC). A large trader is defined by the SEC as "a person whose transactions in National Market System (NMS) securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month."Any market participant who is, by definition, a large trader must identify themselves to the SEC and submit Form 13H, "Large Trader Registration: Information Required of Large Traders Pursuant to Section 13(h) of the Securities Exchange Act of 1934 and Rules Thereunder."

Definition

A large trader is defined by the Securities and Exchange Commission (SEC) as an investor or organization whose trading volume meets or exceeds certain thresholds. The SEC defines a large trader as an individual whose transactions in National Market System (NMS) securities exceed two million shares or $20 million in any calendar day, or 20 million shares or $200 million in any calendar month.

Origin

The concept of a large trader originated from the SEC's efforts to better monitor and manage market activities. This rule became effective on July 1, 2011, aiming to enhance market transparency and regulatory efficiency.

Categories and Features

Large traders are primarily categorized into individual investors and institutional investors. Individual investors are typically high-net-worth individuals whose trading volumes meet the SEC's criteria. Institutional investors include hedge funds, investment banks, and other financial institutions that engage in large-scale trading to execute their investment strategies. The main feature of large traders is their significant trading volume, which can impact market liquidity and price volatility.

Case Studies

A typical case involves a large hedge fund making substantial stock purchases during market volatility, causing a short-term spike in the stock's price. Another example is an investment bank conducting large-scale asset adjustments at the end of a quarter, affecting the liquidity and prices in the related markets.

Common Issues

Common issues for investors include determining whether they qualify as large traders and how to comply with the SEC's reporting requirements. A common misconception is that only institutions can be large traders, whereas individual investors can also meet the criteria.

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