Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

FINRA Proposes Rule to Revise Qualification and Registration Requirements

Posted in Broker-Dealer

On March 8, the Financial Industry Regulatory Authority filed a proposed rule change with the Securities and Exchange Commission to adopt amendments to the qualification and registration requirements for associated persons. The proposed rule change restructures the current qualification examinations, creates a general knowledge examination and specialized knowledge examinations, and revises the continuing education requirements. The new rule would also consolidate certain National Association of Securities Dealers’ rules and New York Stock Exchanges’ rules into the FINRA Rulebook.

More information is available here.

SEC Proposes Amendments to Rule 15c2-12

Posted in Broker-Dealer

The Securities and Exchange Commission recently proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934. Rule 15c2-12 prohibits dealers acting as an underwriter for a primary offering of municipal securities from purchasing or selling those securities after the occurrence of certain events.

To comply with the rule, underwriters typically provide event notices to the Municipal Securities Rulemaking Board (MSRB). The proposed amendment would change the list of events for which notice is to be provided to the MSRB to include (1) the incurrence of certain financial obligations of an obligated person; and (2) other events that reflect financial difficulties of an obligated person.

The rule proposal is available here.


Government Publishes Report on UK Trade Options After Brexit

Posted in Brexit, Brexit/UK Developments, Financial Markets, UK Developments

On March 7, the UK House of Commons International Trade Committee (Committee) published a report titled “UK trade options beyond 2019” (Report).

In the Report, the Committee examines different potential models for UK international trade after the United Kingdom leaves the European Union. The Report covers the UK’s relationship with the World Trade Organization (WTO), the proposed free-trade agreement (FTA) between the United Kingdom and the European Union, and the implications of the United Kingdom trading with the European Union under WTO rules only. Continue Reading

FCA Highlights Best Execution Concerns at Investment Managers

Posted in Financial Markets, UK Developments

On March 3, the UK Financial Conduct Authority (FCA) published a Press Release in which it expresses concern about how investment managers are failing to ensure effective oversight of best execution.

The FCA’s concerns include:

  • poor practices not being addressed despite the FCA’s 2014 thematic review on the topic;
  • poor use of management information on execution costs and an inability to show any improvement to execution process based on cost data, resulting in ‘box ticking’; and
  • compliance staff not being empowered to effectively challenge execution quality.

Continue Reading

FCA Summarizes Findings of a Review on the Use of Dealing Commission

Posted in Financial Markets, UK Developments

On March 3, the UK Financial Conduct Authority (FCA) published a Press Release summarizing how firms have been failing to meet expectations on their use of dealing commission, based on a review of 31 investment managers between 2012 and 2015. Continue Reading

HM Treasury Amends Definition of Financial Advice

Posted in Financial Markets, UK Developments

On February 28, HM Treasury published its response (Response) to its consultation on amending the definition of “financial advice” for the purposes of article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001(RAO). The Response gives summaries of responses submitted to the consultation by market participants, as well as the government’s position. Continue Reading

European Commission Publishes CMU Report on National Barriers to Capital Flows

Posted in EU Developments, Financial Markets

On February 27, the European Commission (EC) published a report (Report) on its capital markets union (CMU) initiative addressing national barriers to capital flows. The Report sets out the initial findings of the EC’s group of representatives of member states on national barriers to cross-border capital flows and the steps that the EC expects member states to take to address them. Continue Reading

ESMA Issues Opinion on UCITS Share Classes

Posted in EU Developments, Financial Markets

On January 30, the European Securities and Markets Authority (ESMA) issued an opinion (Opinion) on share classes within Undertakings for Collective Investment in Transferable Securities (UCITS) funds. The Opinion sets out high-level common principles for setting up and operating share classes. Continue Reading

EU and Prudential Regulators Issue Statements on March 1 Compliance With Swap Margin Rules

Posted in Banking, Derivatives, Dodd-Frank Developments

Lacking the ability to issue formal no-action relief from strict compliance with the variation margin rules for uncleared swaps coming into effect on March 1, the Board of Governors of the Federal Reserve System, the Office of Comptroller of the Currency (OCC) and the European Supervisory Authorities (ESA) have each issued statements suggesting that they will exercise some forbearance in enforcing the margin rules after March 1 if a swap dealer subject to their respective regulations is diligently pursuing compliance on that date. The communications from the Federal Reserve Board and the OCC follow the lead of the no-action relief issued by the Commodity Futures Trading Commission on February 13 by pointing to September 1 as the latest date for full compliance. The ESA communication is stricter in tone and does not identify a specific period in which enforcement will be relaxed. (There are no equivalent statements from the other US prudential regulators because they do not regulate any swap dealers and therefore do not have this issue.)

The Federal Reserve Board statement is available here. The OCC statement is available here.

The ESA statement is available here.


UK Private Fund Limited Partnerships

Posted in Financial Markets, UK Developments

HM Treasury has published a revised draft Legislative Reform Order (Order) on amendments to the Limited Partnership Act 1907 (Act), which was laid before parliament on January 16. The Order relates to the new private fund limited partnership (PFLP) structure. The PFLP is designed to reduce the administrative and financial burdens that impact funds under the current limited partnership (LP) structure, thereby making the United Kingdom a more attractive jurisdiction for funds. Further information on the proposal stage of the Order can be found in the Corporate & Financial Weekly Digest edition of August 7, 2015. Continue Reading