The U.S. Securities and Exchange Commission on Friday adopted final rules requiring directors and officers of foreign private issuers to begin disclosing their holdings and transactions of the issuer's securities on March 18, as mandated under a new law aimed at cracking down on foreign insider trading.

The Holding Foreign Insiders Accountable Act, signed into law as part of an appropriations bill in December, amended the Securities Exchange Act of 1934 to require leaders of foreign private issuers to disclose their securities holdings, as well as to notify the public of any trading on those holdings. Congress gave the SEC until March 18 to issue final regulations to carry out the amendments.

The final rules amend Section 16(a) of the Exchange Act to require officers and directors of foreign private issuers to make their disclosures electronically and in English, according to the adopting release.

According to the SEC, the new reporting requirements will benefit investors by providing "greater transparency about the trading and beneficial ownership positions of [foreign private issuer] directors and officers." The agency estimates that there are over 1,100 foreign private issuers with a registered class of securities with the Commission, and that between 3,700 and 21,000 of their officers and directors could become reporting persons under the new rules.

"This enhanced transparency can aid investors in obtaining a more accurate picture of incentives of directors and officers of FPIs and a potentially more accurate valuation of the issuer's shares, enabling better informed investment decisions and contributing to more efficient allocation of investor capital," the release states.

"The new mandatory Section 16(a) disclosures will significantly increase the transparency regarding the trading and beneficial ownership of an FPI's equity securities by its directors and officers (in the case of FPIs from home country jurisdictions without a similar reporting requirement), which may not be attained under a voluntary regime," the release further states.

In a statement, SEC Commissioner Mark Uyeda shared similar thoughts, saying the HFIA Act and new rules can promote transparency in the U.S. markets.

"The HFIA Act levels the playing field for foreign private issuers that choose to voluntarily register their securities in the United States in order to take advantage of the liquidity and efficiencies of U.S. markets. They will now be subject to requirements that have been long applicable to domestic issuers," he said.

Notably, though, the final rules exempt officers and directors of foreign private issuers who own more than 10% of any class of equity securities, also known as "10 percent holders."

Last month, former SEC Commissioner Robert Jackson, now a law professor at New York University, signed a rulemaking petition that, among other things, expressed surprise that the new rules may exempt 10% holders, saying evidence shows "that ten percent holders engage in especially opportunistic trading at FPIs."

According to SEC Chairman Paul Atkins, when enacting the HFIA Act, Congress also "recognized the possibility that some foreign laws may already impose substantially similar requirements on executives," so it gave the Commission the authority to "exempt persons, securities, or transactions from the HFIA Act's requirements."

Atkins said Friday that Commission staff is "actively evaluating whether it will recommend that the Commission exercise this exemptive authority."

The Commission is also currently in the process of rethinking the definition of foreign private issuers. It put out a call for feedback last year on whether the definition should be tightened, potentially making access to U.S. markets harder for companies based in China and beyond.