Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

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

FINRA Releases Additional Guidance With Respect To Enhanced Disclosure Requirements for Corporate and Agency Debt Securities Transactions

Posted in Broker-Dealer

The Financial Industry Regulatory Authority, Inc. has released frequently asked questions (FAQs) related to the enhanced confirmation disclosure requirements for certain corporate and agency debt securities transactions pursuant to recently approved amendments to FINRA Rule 2232. The new requirements obligate FINRA members to disclose additional transaction-related information to retail customers for trades in corporate or agency debt securities where the FINRA member executes on offsetting principal trade in the same security on the same day. Required disclosure includes relevant mark-ups and mark-downs and time of execution, as well as the provision of links to security-specific webpages that contain relevant information about the securities on the confirmation. The new requirements go into effect on May 14, 2018. The FAQs provide additional information related to when disclosure requirements under FINRA Rule 2232 are triggered, the scope of securities and transactions to which the disclosure requirements pertain, the content and format of the required disclosures, and the determination of prevailing market price. FINRA expects to update the FAQs periodically.

FINRA’s announcement regarding the release of the FAQs is available here. The FAQs is available here.

FCA Publishes Notification Guide for Firms Wanting To Rely on MiFID II Ancillary Activity Exemption

Posted in Derivatives, EU Developments, Financial Markets, UK Developments

On July 19, the UK Financial Conduct Authority (FCA) updated its webpage on the introduction of the commodity derivatives position limits and reporting regime under the revised Markets in Financial Instruments Directive (MiFID II).

The FCA explains that, under the MiFID II Directive, firms or individuals who trade in commodity derivatives on a professional basis may, under Article 2(1)(j) of MiFID II, be able to make use of an exemption from authorization (referred to as the “ancillary activity exemption”). Continue Reading

FCA Publishes MiFID II Passporting Forms

Posted in EU Developments, Financial Markets, UK Developments

On July 17, the UK Financial Conduct Authority (FCA) published a new webpage on passporting under the revised Markets in Financial Instruments Directive (MiFID II). Firms are required to make a passporting application under MiFID II if they intend to be conducting European Economic Area (EEA) activities that have been implemented as new MiFID II activities (such as operating an organized trading facility (OTF)), or if they will become newly authorized under MiFID II and need to passport after January 3, 2018. Continue Reading

ESMA Consults on Evaluation of Short Selling Regulation

Posted in EU Developments, Financial Markets

On July 7, the European Securities and Markets Authority (ESMA) published a consultation paper (CP) on the evaluation of certain elements of the Short Selling Regulation (Regulation 236/2012) (SSR).

The consultation is intended to help ESMA provide technical advice to the European Commission (EC) Continue Reading

Proposed Rule Change Relating To Revisions To the Definition of Non-public Arbitrator

Posted in Broker-Dealer

On July 11, the Financial Industry Regulatory Authority filed a proposed rule amendment to change the definition of a non-public arbitrator under the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes (collectively, the Codes), to a person who is otherwise qualified to serve as an arbitrator, and is disqualified from service as a public arbitrator under the Codes.

FINRA classifies arbitrators as either non-public or public. Generally, non-public arbitrators are those who have or had some affiliation with the financial industry. Based upon 2015 rule amendments, certain otherwise qualified arbitrator applicants did not meet the criteria for either public or non-public status, resulting in FINRA rejecting such applicants. The new rule amendment is designed to allow FINRA to appoint individuals to the roster of non-public arbitrators if they meet FINRA’s general arbitrator qualification criteria, but cannot be qualified as public arbitrators.

For more information, click here.

SEC’s Recent Order Approving FINRA Rule Change Relating To Qualification and Registration Requirements

Posted in Broker-Dealer

On July 7, the Securities and Exchange Commission issued an order adopting the Financial Industry Regulatory Authority’s proposed rule amending the qualification and registration requirements for associated persons. The new rule restructures the current qualification examinations, creates a general knowledge examination called Securities Industry Essentials (SIE) and specialized knowledge examinations, and revises the continuing education requirements. The new rule also consolidates certain National Association of Securities Dealers rules and New York Stock Exchange rules into the FINRA Rulebook.

In particular, the new rule requires first-time registrants to take the SIE exam prior to taking a representative qualification examination specific to their job function at a FINRA member firm. In addition, the new rule expands the scope of individuals who may permissively register and allows individuals flexibility to retain their registration status, even after working at a non-FINRA member financial services affiliate for an extended period.

For more information, click here.

CFTC Announces Review of Swaps Reporting Regulations

Posted in CFTC

On July 10, the Commodity Futures Trading Commission’s Division of Market Oversight (Division) issued Staff Letter 17-33 (Staff Letter), which announced the launch of a comprehensive review of swap data reporting requirements. The review will focus on existing regulations with the goal of (1) ensuring the CFTC receives accurate, complete and high-quality data regarding swap transactions, (2) streamlining data reporting, (3) reducing the number of messages that must be reported, and (4) right-sizing the number of data elements reported to meet the CFTC’s prior use cases for swap data. In addition to the Staff Letter, the Division also released the Roadmap to Achieve High Quality Swaps Data (Roadmap), which outlines the Division’s plan for improving swap data reporting. Upon the completion of its review, the CFTC expects to adopt final rules and have full industry implementation by the end of 2019.

To solicit industry feedback regarding the plan outlined in the Roadmap, the CFTC has opened a 40-day comment period, which will end on August 21.

Staff Letter 17-33 is available here.

The Roadmap to Achieve High Quality Swaps Data is available here.

ESMA Publishes Opinions To Support Supervisory Convergence Post-Brexit

Posted in EU Developments

On July 13, the European Securities and Markets Authority (ESMA) published three opinions (Opinions) to support supervisory convergence (i.e., a consistent approach to authorization, supervision and enforcement) in the European Union in light of the potential relocation of entities from the United Kingdom to the remaining 27 member states of the EU (EU27) following Brexit. Continue Reading

ESMA Invites European Commission To Strengthen EU Third-country Equivalence Regime For Key Market Players In Light of Brexit

Posted in EU Developments

On July 10, the European Securities and Markets Authority (ESMA) published a letter (dated July 7) (Letter) from Steven Maijoor, ESMA chair, to Valdis Dombrovskis, European Commission (EC) vice president, on the regulatory regimes for non-EU countries (known as “third countries”) where they are within ESMA’s area of authority. Continue Reading