Prep Now for Imminent Changes to US Shareholding Disclosures

Up-front urgencies

To comply with these new SEC requirements for SH and SS disclosures, firms face urgent challenges. Chief among them are:

• Locating and making available newly covered beneficial ownership data, especially for cash-settled instruments. If firms have not yet accomplished this step, they are already at risk of missing the initial disclosure due date of February 5, 2024.
• Locating and making available short-sale-related data and instituting calculations to meet SS filing requirements.
• Establishing the newly intensified monitoring cadences (down to the time of submission) across the board.
• Prepping the machine-readable reporting format due in December 2024. No more PDFs.

Behind the scenes prep

Given the brief time remaining to prepare, and the urgent up-front challenges, it is essential for firms whose investment value puts them in scope to seek the most strategic means to handle and futureproof themselves for the SEC’s burgeoning shareholding disclosure requirements.

The complexities of these disclosures require a data management and regulatory reporting system that:

• Easily incorporates equity, equity and cash-settled derivatives, and short-selling position tracking datasets from a firm’s disparate sources
• Swiftly determines a holding’s eligibility for disclosure via a fit-for-purpose data-dictionary architecture that understands beneficial ownership types
• Accurately onboards and reflects a firm’s specific entity hierarchy so that shareholding data can be aggregated and disaggregated as needed at entity and group levels in accordance with intricate, changing disclosure requirements
• Provides transparent and flexible application of rules. For example, given organizations’ distinct entity structures, a firm may require certain operating model rule-modifications
• Calculates thresholds on large data volumes and provides an alert on any breach, enabling firms to manage their individual disclosure obligations on a timely basis
• Compiles reports according to threshold rules within disclosure submission timelines in various machine-readable formats as defined by each regulator (e.g., XML, XBRL, and HTML)
• Is SaaS-enabled to efficiently handle large data volumes and calculations, and, ideally, also provides regulatory change-management support
• Is modular in the sense that a firm only required to disclose SH, can do that, and add SS monitoring if it becomes necessary
• Is globally applicable, so a firm can address all its shareholding disclosure requirements in a uniform way across jurisdictions

The CAT connection