Cloak Comes Off Biggest Stock Traders in SEC Monitoring Mandate

The Securities and Exchange Commission spent 21 years seeking a system to monitor America’s largest stock traders. It took a 20-minute market plunge to convince the securities industry it was a good idea.

The May 2010 crash that erased $862 billion from stocks in 20 minutes persuaded brokers the SEC needs a fast and efficient mechanism to gather trading data from the largest market participants.

New rules that allow the SEC to track the 300 biggest firms will help U.S. regulators reconstruct crashes, police violations and curb behavior they don’t like, according to industry executives and academics.

The SEC estimated the rule will apply to about 400 large traders and 300 brokers, with most of the costs borne by the securities firms. People or companies that transact at least 2 million shares or $20 million of securities in a day, or 20 million shares or $200 million in a month, are covered by the rules, according to the SEC.