Hi all, i am a relatively new trader (about 12 months live trading in options). I just recently got contacted by my brokerage to register as a large trader with the SEC. Has anyone run into this and had to register? I am confused about the process of obtaining what they call a "CIK" key. Any enlightenment would be much appreciated.
Large Trader Registration
- Thread starter bigbrian000
- Start date
rmorse
Sponsor
Are you trading a lot of volume in high priced equities like SPY or Google? https://www.sec.gov/divisions/marketreg/large-trader-faqs.htm
Question 1.3: How are options calculated for purposes of the identifying activity level?
Answer: As provided in Rule 13h-1(a)(7), the identifying activity level means aggregate transactions in NMS securities that are equal to or greater than:
For equity options, Rule 13h-1(c)(1)(i) provides that “the volume or fair market value of the equity securities underlying transactions in options on equity securities, purchased and sold, shall be aggregated.” For index options, Rule 13h-1(c)(1)(ii) provides that “the fair market value of transactions in options on a group or index of equity securities (or based on the value thereof), purchased and sold, shall be aggregated.”
As noted in the Adopting Release (34-64976), “for purposes of the identifying activity level with respect to options, only purchases and sales of the options themselves, and not transactions in the underlying securities pursuant to exercises or assignments of such options, need to be counted. However, for purposes of the identifying activity level, the volume and value of options purchased or sold would be determined by reference to the securities underlying the option” (emphasis added).
Accordingly, to calculate the volume of options for purposes of Rule 13h-1, the number of contracts should be multiplied by the applicable multiplier. For example, 500 contracts x 100 shares of the underlying per contract = 50,000 shares.
To calculate the value of options for purposes of Rule 13h-1, the value of the securities underlying the option should be used. For example, consider a call option with a $20 strike price (with a 100 multiplier) that is trading at a price of $4, where the underlying stock is trading at $22 at the time of the transaction. For purposes of Rule 13h-1, 10 contracts would be calculated as follows: 10 contracts x 100 shares per contract x $22 market price of the underlying = $22,000.
While Rule 13h-1 contemplates the calculation will be performed with reference to the price of the underlying at the time of the options transaction, a person may also consider the price of the underlying at the close of trading on the trade date if that would be less expensive or easier for them to use than the price at the time of the transaction.
Unlike for equity options, index options volume does not need to be calculated.
Calculation of the value of an index option is calculated as follows. Footnote 64 of the Adopting Release (34-64976) provided the following example: "if ABC Index has a multiplier of 100, a person who purchased 200 ABC call options for $400 would have effected aggregate transactions of $8 million (i.e., 200 x 400 x 100 = $8,000,000)." By way of another example, consider an investor that wants to purchase 100 contracts of puts on an index, at a strike price of 1375, where the index is trading at 1380, and where the option uses a 100 multiplier. If the quoted price for these puts is $51.00 per unit, the price per contract would be $5,100. The value of these index options for purposes of Rule 13h-1 would be: 100 contracts x $51 price per unit x $100 contract multiplier = $510,000
Question 1.3: How are options calculated for purposes of the identifying activity level?
Answer: As provided in Rule 13h-1(a)(7), the identifying activity level means aggregate transactions in NMS securities that are equal to or greater than:
- During a calendar day, either two million shares or shares with a fair market value of $20 million; or
- During a calendar month, either twenty million shares or shares with a fair market value of $200 million.
For equity options, Rule 13h-1(c)(1)(i) provides that “the volume or fair market value of the equity securities underlying transactions in options on equity securities, purchased and sold, shall be aggregated.” For index options, Rule 13h-1(c)(1)(ii) provides that “the fair market value of transactions in options on a group or index of equity securities (or based on the value thereof), purchased and sold, shall be aggregated.”
As noted in the Adopting Release (34-64976), “for purposes of the identifying activity level with respect to options, only purchases and sales of the options themselves, and not transactions in the underlying securities pursuant to exercises or assignments of such options, need to be counted. However, for purposes of the identifying activity level, the volume and value of options purchased or sold would be determined by reference to the securities underlying the option” (emphasis added).
Accordingly, to calculate the volume of options for purposes of Rule 13h-1, the number of contracts should be multiplied by the applicable multiplier. For example, 500 contracts x 100 shares of the underlying per contract = 50,000 shares.
To calculate the value of options for purposes of Rule 13h-1, the value of the securities underlying the option should be used. For example, consider a call option with a $20 strike price (with a 100 multiplier) that is trading at a price of $4, where the underlying stock is trading at $22 at the time of the transaction. For purposes of Rule 13h-1, 10 contracts would be calculated as follows: 10 contracts x 100 shares per contract x $22 market price of the underlying = $22,000.
While Rule 13h-1 contemplates the calculation will be performed with reference to the price of the underlying at the time of the options transaction, a person may also consider the price of the underlying at the close of trading on the trade date if that would be less expensive or easier for them to use than the price at the time of the transaction.
Unlike for equity options, index options volume does not need to be calculated.
Calculation of the value of an index option is calculated as follows. Footnote 64 of the Adopting Release (34-64976) provided the following example: "if ABC Index has a multiplier of 100, a person who purchased 200 ABC call options for $400 would have effected aggregate transactions of $8 million (i.e., 200 x 400 x 100 = $8,000,000)." By way of another example, consider an investor that wants to purchase 100 contracts of puts on an index, at a strike price of 1375, where the index is trading at 1380, and where the option uses a 100 multiplier. If the quoted price for these puts is $51.00 per unit, the price per contract would be $5,100. The value of these index options for purposes of Rule 13h-1 would be: 100 contracts x $51 price per unit x $100 contract multiplier = $510,000
I do frequently trade the spy weeklies. I might qualify under the guidelines listed as a large trader, i have contacted my brokerage to provide the trades that put me over the tipping point so to speak. They are supposed to get back to me within 24 hours...wah wah.
My confusion though is in the actual process in registering for EDGAR access. I would have to file the online form, then also provide something written and notarized? I was hoping to get advice on that process from someone who might have done it before. They have some hefty manuals that are not really helpful.
My confusion though is in the actual process in registering for EDGAR access. I would have to file the online form, then also provide something written and notarized? I was hoping to get advice on that process from someone who might have done it before. They have some hefty manuals that are not really helpful.
rmorse
Sponsor
The process is in the same document. Just take it slow and go step by step.
Section 2. Form 13H
Question 2.1: How do I access Form 13H?
Answer: Form 13H is an online web-based electronic form available only to persons with EDGAR access. For reference purposes, a paper copy of the form can be found on the Commission’s website:http://www.sec.gov/about/forms/secforms.htm.
If a filer does not yet have EDGAR access, then in order to gain the necessary permission and access to file documents through the EDGAR system, a filer must first submit Form ID to obtain a Central Index Key (‘‘CIK’’) and other EDGAR access codes (including a password). Form ID must be submitted through EDGAR’s Filer Management website (https://www.filermanagement.edgarfiling.sec.gov). A step-by-step Reference Guide for how to complete and submit Form ID is available here: http://www.sec.gov/info/edgar/quick-reference/form-id.pdf. Additional FAQs on the Form ID process can be found here:http://www.sec.gov/info/edgar/form-id-faq.pdf.
Filers should have only one CIK number, and should use their existing CIK (if applicable) to file Form 13H. If a filer was previously a paper-based broker-dealer filer, it can convert to an electronic filer to enable it to electronically file Form 13H. Paper-based filers may apply to convert to electronic filers at https://www.filermanagement.edgarfiling.sec.gov/.
Once a filer has a CIK and password, the filer may then access Form 13H through the EDGAR filer website (https://www.edgarfiling.sec.gov). After logging on to the EDGAR filer website, the web-based Form 13H is available by clicking on the “Form 13H” hyperlink on the left hand side of the screen under “Online Forms”. Form 13H must be completed and submitted electronically through the EDGAR filer website.
More information on accessing and using EDGAR is available in the EDGAR Filer Manual, available at:http://www.sec.gov/info/edgar/edmanuals.htm. Volume I of the Filer Manual is a reference for those that need to obtain EDGAR access and for those that are new to EDGAR. Volume II focuses on the filing process and illustrates each step of the process to submit an electronic submission. Volume II contains specific instructions for Form 13H.
If you have technical questions relating to EDGAR that are not addressed in those documents, EDGAR Filer Support and Filer Technical Support can be reached at (202) 551-8900.
Section 2. Form 13H
Question 2.1: How do I access Form 13H?
Answer: Form 13H is an online web-based electronic form available only to persons with EDGAR access. For reference purposes, a paper copy of the form can be found on the Commission’s website:http://www.sec.gov/about/forms/secforms.htm.
If a filer does not yet have EDGAR access, then in order to gain the necessary permission and access to file documents through the EDGAR system, a filer must first submit Form ID to obtain a Central Index Key (‘‘CIK’’) and other EDGAR access codes (including a password). Form ID must be submitted through EDGAR’s Filer Management website (https://www.filermanagement.edgarfiling.sec.gov). A step-by-step Reference Guide for how to complete and submit Form ID is available here: http://www.sec.gov/info/edgar/quick-reference/form-id.pdf. Additional FAQs on the Form ID process can be found here:http://www.sec.gov/info/edgar/form-id-faq.pdf.
Filers should have only one CIK number, and should use their existing CIK (if applicable) to file Form 13H. If a filer was previously a paper-based broker-dealer filer, it can convert to an electronic filer to enable it to electronically file Form 13H. Paper-based filers may apply to convert to electronic filers at https://www.filermanagement.edgarfiling.sec.gov/.
Once a filer has a CIK and password, the filer may then access Form 13H through the EDGAR filer website (https://www.edgarfiling.sec.gov). After logging on to the EDGAR filer website, the web-based Form 13H is available by clicking on the “Form 13H” hyperlink on the left hand side of the screen under “Online Forms”. Form 13H must be completed and submitted electronically through the EDGAR filer website.
More information on accessing and using EDGAR is available in the EDGAR Filer Manual, available at:http://www.sec.gov/info/edgar/edmanuals.htm. Volume I of the Filer Manual is a reference for those that need to obtain EDGAR access and for those that are new to EDGAR. Volume II focuses on the filing process and illustrates each step of the process to submit an electronic submission. Volume II contains specific instructions for Form 13H.
If you have technical questions relating to EDGAR that are not addressed in those documents, EDGAR Filer Support and Filer Technical Support can be reached at (202) 551-8900.
If you don't mind me asking, how big are you...how much do you trade? volume/size/frequency, etc
If you don't mind me asking, how big are you...how much do you trade? volume/size/frequency, etc
50-300 contracts, weeklies, spy, qqq, dia
According to the sec website, the threshold is $20million in a day or $200 million in a month in the underlying's price. In share value a trader affects. So on a $100 share, you would only need to trade 2000 contracts in a day or 20,000 in a month.
I still can't believe I got flagged though. I don't think I'm trading near that much since I only trade maybe twice a week.
...is a round trip day trade considered one trade/contract? or is it considered two contracts; one for buying it...and another, for selling it?