# How to Complete the Investment Discretion Section of Form 13F
The Investment Discretion field in Column 6 of the Form 13F Information Table tells the SEC how the reporting manager makes investment decisions for each reported holding.
For every information-table entry, the permitted values are:
- SOLE — sole investment discretion
- DFND — shared-defined investment discretion
- OTR — shared-other investment discretion
Choosing among them is not simply a matter of asking who owns the security or who votes the shares. The correct classification depends on who has the authority to decide whether the security is bought, sold, or held and, when that authority is shared, the relationship between the parties.
This guide explains a practical way to complete Column 6, when a holding must be divided into separate rows, and how Column 6 interacts with the Other Manager field in Column 7.
Important: This article is general information, not legal or compliance advice. Investment-discretion questions can depend on governing agreements, control relationships, and actual decision-making practices. Escalate uncertain classifications to qualified securities counsel or an experienced Form 13F professional.
What “investment discretion” means
The SEC staff’s Form 13F FAQ explains that an institutional investment manager exercises investment discretion when the manager:
- has the power to determine which securities are bought or sold for an account; or
- makes decisions about which securities are bought or sold, even if someone else has ultimate responsibility for the investment decision.
A manager is also deemed to have investment discretion over accounts for which a person or entity under its control exercises discretion. That is why parent companies, subsidiaries, bank holding companies, bank trust departments, advisers, and affiliated funds can require special attention.
Investment discretion is a question of decision-making authority. It is not determined solely by:
- who holds legal title;
- who maintains custody;
- who is named on the account;
- who has beneficial ownership; or
- who has voting authority.
Review the investment-management agreement, subadvisory agreement, trust instrument, corporate-control structure, or other governing documents—and confirm how investment decisions are actually made.
Step 1: Identify the reporting manager
Start with the institutional investment manager whose Form 13F is being prepared. Column 6 describes the investment discretion exercised by that reporting manager for the shares or principal amount shown on the same row.
Do not classify the entire firm or filing with one blanket answer before reviewing the underlying account structures. The same reporting manager can have:
- sole discretion over one group of accounts;
- shared-defined discretion over another group; and
- shared-other discretion over a third group.
A single issuer and security class may therefore require multiple lines.
Step 2: Decide whether discretion is sole or shared
Ask whether another person or entity shares authority over the investment decision for the position.
Use SOLE when the reporting manager acts alone
Enter SOLE when the reporting manager exercised sole investment discretion over the shares on that line.
A common example is a separately managed account in which the client has delegated full trading authority to the adviser and no other manager participates in the investment decisions. The client may retain other rights—including voting rights—without converting the adviser’s investment discretion into shared discretion.
Do not assume an institutional client shares discretion
The Form’s instructions say that a manager of an institutional account, such as a pension fund or investment company, is not deemed to share investment discretion with the institution unless the institution actually participated in the investment decision-making.
Client ownership, investment guidelines, or the ability to terminate an adviser does not automatically answer whether the client participates in individual investment decisions. Review the facts and governing agreements.
Step 3: If discretion is shared, distinguish DFND from OTR
Use DFND for shared-defined relationships
Enter DFND when investment discretion is shared through one of the relationships identified in the Form’s instructions, including:
- controlling and controlled companies, such as a parent company and subsidiary;
- an investment adviser and an investment company advised by that adviser; or
- an insurance company and its separate account.
Control relationships deserve careful review because a parent or controlling company may be deemed to share discretion over accounts managed by a controlled entity.
Use OTR for other sharing arrangements
Enter OTR when discretion is shared in a manner that does not fit the shared-defined category.
Examples may include unaffiliated co-managers that jointly participate in investment decisions. The SEC staff’s FAQ also directs managers to use shared-other when discretion is shared through multiple levels of control rather than a single defined relationship.
Do not choose OTR merely because another service provider is involved. A custodian, administrator, consultant, or broker does not necessarily exercise investment discretion. The relevant question is whether that party participates in decisions about which securities are bought, sold, or held.
Step 4: Split a holding when the discretion classification differs
Form 13F requires holdings of the same issuer and class to be segregated according to the nature of the reporting manager’s investment discretion.
Suppose the reporting manager holds 75,000 shares of the same security across its accounts:
- 50,000 shares are managed with sole discretion; and
- 25,000 shares are subject to shared-other discretion.
Those shares should not be combined into one 75,000-share line. They should be reported as separate entries:
- one line for 50,000 shares with SOLE in Column 6; and
- one line for 25,000 shares with OTR in Column 6.
A split may also be required when two groups of shared holdings use the same Column 6 category but involve different combinations of Other Included Managers. The conditions of sharing must be consistent for all holdings reported on a single line.
Step 5: Determine whether Column 7 applies
Column 6 and Column 7 are related, but they answer different questions.
- Column 6 describes the nature of the reporting manager’s investment discretion.
- Column 7 identifies another independently required manager on whose behalf this filing reports the holding.
Column 7 is not a list of every party with whom discretion is shared.
Enter a number in Column 7 only when:
- this Form 13F reports the holding on behalf of another manager;
- that other manager is included in the Summary Page’s List of Other Included Managers; and
- the number entered in Column 7 is the number assigned to that manager on the Summary Page.
If discretion is shared with a person or manager that is not independently required to file Form 13F for the period, that party generally is not listed as an Other Included Manager and is not identified in Column 7 merely because discretion is shared. Column 6 may still be DFND or OTR while Column 7 remains blank.
Step 6: Keep anti-duplication rules separate from Column 6
When two or more managers are each required to file Form 13F and share discretion over the same securities, the Form’s general instructions provide that only one manager must include those overlapping holdings in an Information Table.
This anti-duplication rule does not eliminate another manager’s filing obligation. Instead, each required manager must determine whether it files:
- a Holdings Report, because all of its holdings are reported in its own filing;
- a Combination Report, because some holdings are reported in its filing and some by another manager; or
- a Notice, because all of its holdings are reported by another manager.
Do not infer a row’s Column 6 value from the filing’s report type. A Combination Report does not mean that every information-table row must use DFND or OTR, and a Holdings Report can include shared-discretion positions.
Step 7: Determine voting authority separately
Column 8 asks about voting authority. It is separate from investment discretion.
A manager can have:
- SOLE investment discretion and no voting authority;
- SOLE investment discretion and sole voting authority;
- shared investment discretion and sole voting authority under the Form’s special convention for certain shared-defined relationships; or
- another combination supported by the governing facts.
Do not copy the Column 6 classification into Column 8. Review proxy-voting authority independently and allocate the shares among Sole, Shared, and None as required.
For ordinary share positions, the Column 8 amounts should add up to the number of shares reported on that line.
A practical decision checklist
For each issuer and security class, ask:
- Who actually decides whether the security is bought, sold, or held?
- Does the reporting manager make that decision alone? If yes, use SOLE.
- If discretion is shared, is it a defined parent/subsidiary, adviser/fund, or insurer/separate-account relationship? If yes, consider DFND.
- If the sharing arrangement falls outside those defined relationships, does OTR apply?
- Do different shares of the same security have different discretion categories? If yes, split the holding into separate rows.
- Does this filing report any part of the holding on behalf of another independently required Form 13F manager? If yes, verify the Summary Page listing and Column 7 number.
- Are voting rights different from investment discretion? Complete Column 8 independently.
- Do contracts, control relationships, or actual practices create uncertainty? Stop and obtain qualified review rather than guessing.
Common mistakes to avoid
Using legacy numeric codes
The SEC’s current Excel guidance states that the acceptable Investment Discretion values are SOLE, DFND, and OTR, in capital letters. Do not substitute informal labels or legacy numeric shorthand in the current Information Table.
Listing every shared party in Column 7
Column 7 contains only Summary Page numbers for applicable Other Included Managers. Do not enter the reporting manager, a custodian, a client, or every person involved in the account.
Combining shares with different discretion arrangements
If the same security is held under both sole and shared discretion—or under different sharing combinations—one aggregated line can misstate the manager’s authority. Split the position as required.
Treating voting authority as the same as discretion
The power to trade and the power to vote are different. A client can delegate trading authority while retaining proxy-voting authority.
Assuming every shared manager reports the same holding separately
The Form’s anti-duplication rule generally calls for overlapping holdings shared by independently required managers to appear in only one Information Table, with the required manager relationships disclosed through the appropriate Cover Page, Summary Page, and Column 7 mechanisms.
Final review before creating the XML file
Before exporting or uploading the Information Table:
- confirm every Column 6 entry is exactly SOLE, DFND, or OTR;
- confirm each split line reflects one consistent discretion and manager-sharing arrangement;
- confirm every Column 7 number resolves to the Summary Page list;
- confirm non-included parties have not been inserted in Column 7;
- confirm Column 8 was determined separately; and
- confirm the totals and share allocations reconcile.
A technically valid XML file can still contain a substantively incorrect discretion classification. Review the business facts—not only the spreadsheet format—before submission.
Need help preparing your Form 13F?
File13F helps institutional investment managers prepare and submit Form 13F filings. If your Information Table includes multiple account structures, shared discretion, or Other Included Managers, contact File13F to discuss the filing-preparation process.
Sources
Accessed September 28, 2026:
- U.S. Securities and Exchange Commission, Form 13F and Instructions, especially General Instruction 2 and Special Instructions 7 and 11.b.vi–viii: https://www.sec.gov/about/forms/form13f.pdf
- SEC Division of Investment Management, Frequently Asked Questions About Form 13F, displayed update March 6, 2026, especially Questions 6 and 33–50a: https://www.sec.gov/rules-regulations/staff-guidance/division-investment-management-frequently-asked-questions/frequently-asked-questions-about-form-13f
- SEC, Create an XML Information Table for Form 13F Using Excel, last reviewed or updated September 17, 2026: https://www.sec.gov/submit-filings/filer-support-resources/how-do-i-guides/create-xml-information-table-form-13f-using-excel
The SEC’s Form 13F FAQs express SEC staff views and are not a rule, regulation, or statement of the Commission. File13F content is not reviewed or approved by the SEC.