NYSE Euronext has asked regulators to force large investors to disclose their stock holdings far sooner, in the name of greater transparency and improved corporate governance.
The parent company of the New York Stock Exchange said professional investors managing more than $100m should reveal those holdings within two days of a quarter ending, rather than the current 45 days.
The delay is “unnecessarily long” and has “adverse consequences” for investors and public companies, NYSE said in a petition filed with the Securities and Exchange Commission.
In a move that reopens broader discussions on disclosure, including a contentious attempt to force stricter rules on activist investors, NYSE said investors are denied the ability to track the movements of large and influential investors through the markets, while companies lack timely information about their shareholders.
It is more than a year since the SEC said it would begin a broad review of reporting rules pertaining to so-called beneficial ownership. Regulatory fillings from big investors such as Warren Buffett are keenly awaited by market watchers looking to follow in the footsteps of market gurus, while such investors prefer to avoid alerting the market to their intended trades.
When Mr Buffett took a more than $10bn stake in IBM in 2011, the head of Berkshire Hathaway received special dispensation from regulators to delay the announcement of his accumulation.
Activists operate under rules that require them to notify the market within 10 days of reaching a 5 per cent stake in a company where they intend to take an activist role.
The law firm Wachtell, Lipton, Rosen & Katz has pushed for shortening the reporting period to just one day, and to expand the rules to consider other forms of beneficial ownership such as derivatives positions not captured by rules written decades ago.
Activists opposed the move, and gained a reprieve last year when the weight of rulemaking required by Dodd-Frank financial reform legislation forced the SEC to put off any changes.
Adam Emmerich, partner at Wachtell, said that the changes proposed by NYSE “certainly seem appropriate in today’s world of instantaneous communication”.
The law firm famous for inventing the poison pill takeover defence used by boards to fight off hostile bidders, says that it is interested in greater transparency. It has advised NYSE on corporate matters for several years, but had no input on Wednesday’s petition.
“We have posted the petition on our website for comment and look forward to receiving the public’s views,” a spokesman for the SEC said.
The NYSE petition was also signed by the National Investor Relations Institute and the Society of Corporate Secretaries and Governance Professionals.