Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Cautions Securities Laws May Apply to Interests in Virtual Organizations

Posted in Broker-Dealer, CFTC

On July 25, the Securities and Exchange Commission issued a Report of Investigation cautioning that certain offers and sales of digital assets of virtual organizations (e.g., “coin offerings” or “token sales”) could be deemed securities offerings and therefore subject to the federal securities laws. More details relating to the Report of Investigation are available in Gary DeWaal’s posting in the July 26 edition of Bridging the Week. Katten will also publish a separate client advisory on the subject in the near future.

See also “CFTC Grants DCO Registration to LedgerX” in the CFTC section.

ISDA To Publish T+2 Protocol

Posted in Derivatives, Dodd-Frank Developments

On September 5, the regular settlement cycle for most securities transactions in the United States will change from three days (T+3) to two days (T+2). In order to assist derivative market participants that have existing equity derivative transactions with payment dates based on T+3, the International Swaps and Derivatives Association (ISDA) has developed the 2017 OTC Equity Derivatives T+2 Settlement Cycle Protocol (“T+2 Protocol”). Continue Reading

CFTC Grants DCO Registration to LedgerX

Posted in CFTC, Derivatives

The Commodity Futures Trading Commission has issued an order granting LedgerX LLC registration as a derivatives clearing organization (DCO). As specified in the order, LedgerX is permitted to clear fully collateralized digital currency swaps. A transaction will be fully collateralized if LedgerX holds, at all times, funds in the form of the required payment sufficient to cover the maximum possible loss a counterparty could incur upon liquidation or expiration of the contract. Continue Reading

CFTC Extends Relief From Transaction-Level Requirements for Non-US Swap Dealers

Posted in CFTC, Derivatives

The Division of Swap Dealer and Intermediary Oversight, the Division of Clearing and Risk and the Division of Market Oversight (collectively, the Divisions) of the Commodity Futures Trading Commission have extended relief previously provided in a series of previous no-action letters relating to transaction-level requirements for non-US swap dealers (non-US SDs). Specifically, the Divisions have granted relief to non-US SDs from certain specified “transaction-level requirements” when using personnel or agents located in the United States to arrange, negotiate or execute swaps with non-US persons that are not guaranteed affiliates or conduit affiliates of a US person. Continue Reading

NFA Adopts Interpretive Notice on Swap Valuation Disputes

Posted in CFTC, Derivatives

National Futures Association (NFA) has adopted an interpretive notice that standardizes the process for filing swap valuation disputes with NFA. As set forth in the interpretive notice, swap dealers (SDs) generally are required to file with NFA notices of unresolved swap valuation disputes involving initial margin, variation margin and/or transaction or portfolio valuations if the amount in dispute exceeds $20 million. The interpretive notice also requires SDs to amend previously filed notices if the amount in dispute has increased or decreased by at least $20 million. SDs also must terminate previously filed notices when the matters are resolved or the amount in dispute falls below $20 million. Continue Reading

NFA Adopts 4s Attestation Process for Swap Dealers and Major Swap Participants

Posted in CFTC, Derivatives

National Futures Association (NFA) has revised the process by which each swap dealer (SD) and major swap participant (MSP) applicant demonstrates its ability to comply with Commodity Futures Trading Commission regulations implementing Section 4s of the Commodity Exchange Act (4s Regulations), including but not limited to regulations relating to capital and margin requirements, reporting and recordkeeping and business conduct standards. Effective immediately, applicants will demonstrate compliance with each 4s Regulation by submitting an attestation that the applicant has adopted policies and procedures or other appropriate documentation reasonably designed to ensure that the applicant is in compliance with the 4s Regulation. Continue Reading

Volcker Rule Developments

Posted in Banking, Dodd-Frank Developments

Although the exact future of the Volcker Rule (Section 13 of the Bank Holding Company Act of 1956) under the Trump Administration is unclear, there have been two recent developments that indicate an effort on the part of regulators to make the Rule easier to live with in the short run. Continue Reading

FCA Publishes Proposals To Extend the Senior Managers and Certification Regime to All UK Financial Services Firms

Posted in Financial Markets, UK Developments

On July 26, the Financial Conduct Authority (FCA) published a consultation paper (CP) outlining proposals to extend the Senior Managers and Certification Regime (SM&CR) to all firms authorized under the UK Financial Services and Markets Act 2000 (FSMA). Continue Reading

ESMA Updates Technical Reporting Instructions on MiFIR Transaction Reporting

Posted in EU Developments, Financial Markets

On July 20, the European Securities and Markets Authority (ESMA) published an updated version of its technical reporting instructions relating to transaction reporting under the Markets in Financial Instruments Regulation (MiFIR). Continue Reading

SEC Chairman Clayton Makes First Public Speech Outlining His Vision for the Commission

Posted in Derivatives, SEC/Corporate

On July 12, in his first major address since becoming Chairman of the Securities and Exchange Commission earlier this year, Jay Clayton outlined his vision for the SEC under his Chairmanship based upon eight guiding “principles” and his approach for implementing those principles into practice.

In the speech, delivered at the Economic Club of New York, Chairman Clayton stressed that protection of investors—particularly retail investors (or as Chairman Clayton referred to them, the “Main Street Investor”)—will be a fundamental principle underlying the policies and actions of the SEC under his leadership. Continue Reading