Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Proposes Transaction Fee Pilot Program

Posted in Broker-Dealer

On March 14, the Securities and Exchange Commission proposed new Rule 610T of Regulation National Market System (Reg NMS), which would create a Transaction Fee Pilot program for all NMS stocks. The pilot program is designed to produce data on the effect of transaction fees and rebates on order routing behavior, execution quality, and market quality of the equities exchanges, including taker-maker exchanges. Continue Reading

CFTC Seeks Market Risk Advisory Committee Membership Nominations and Public Comment on Committee Priorities

Posted in CFTC, Derivatives

On March 15, the Commodity Futures Trading Commission published in the Federal Register a request for nominees for the membership positions on the Market Risk Advisory Committee (MRAC). MRAC is a discretionary advisory committee that conducts public meetings and submits reports and recommendations to the CFTC on matters including systemic risk and changes in the market structure of the derivatives markets and other financial markets. In addition to requesting MRAC membership nominations, the Federal Register release also invited the public to recommend additional topics that should be prioritized by the committee.

The deadline for nominations and meeting topics is March 29.

A copy of the Federal Register release is available here.

FCA Launches Survey of Firms that Passport Into the UK

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

On March 9, the UK Financial Conduct Authority (FCA) launched a short online survey for firms providing cross-border services into the UK from other European Union/European Economic Area (EEA) jurisdictions (“passporting”), or marketing funds in the UK.

The survey follows the UK government’s December 2017 announcement that, if necessary, it will legislate to provide a temporary licensing/authorization regime for firms in the EEA and funds passporting into the UK (for more information please see the Corporate & Financial Weekly Digest edition of January 5, 2018). Continue Reading

FCA Publishes Webpage on Review of Closet Trackers

Posted in Financial Markets, UK Developments

On March 14, the UK Financial Conduct Authority (FCA) published a webpage in relation to its review of potential closet tracker funds and closet constrained funds. The review forms part of the FCA’s supervision to protect investors and maintain a competitive market.

On its webpage, the FCA explains that both types of funds look like and charge similar fees to funds that strive to beat a benchmark (active funds), but are managed in a way that is similar to funds that track a benchmark (passive funds). Continue Reading

EC Legislative Proposals on Cross-Border Distribution of Collective Investment Funds

Posted in EU Developments, Financial Markets

On March 12, as part of the development of the EU’s Capital Markets Union (CMU), the European Commission (EC) published two legislative proposals in relation to the cross-border distribution of collective investment funds within the EU:

  1. a Regulation (Proposed Regulation) facilitating the above and amending existing Regulations on European venture capital funds and European social entrepreneurship funds; and
  2. a Directive (Proposed Directive) amending the Undertakings for Collective Investment in Transferable Securities (UCITS) IV Directive and the Alternative Investment Fund Managers Directive (AIFMD).

Continue Reading

SEC Releases Statement on Platforms Trading Digital Assets

Posted in Broker-Dealer

On March 7, the Securities and Exchange Commission released an advisory regarding platforms used to trade digital assets. The SEC expressed concern that, in light of the rise in popularity of trading digital assets, including coins and tokens in initial coin offerings, investors could mistakenly believe that platforms used to trade such assets are registered with the SEC or are otherwise regulated.  In order to protect investors, the SEC indicated that it plans to focus on such platforms and their compliance with federal securities laws. Continue Reading

FINRA Updates Criteria Regarding Business Continuity and Disaster Recovery Testing

Posted in Broker-Dealer

On March 7, the Financial Industry Regulatory Authority published Regulatory Notice 18-09, which expands the criteria FINRA will use to designate member firms that must participate in business continuity and disaster recovery testing (BC/DR testing). Regulation SCI requires FINRA to designate firms that must participate in BC/DR testing.  Regulatory Notice 18-09 indicates that the following firms must engage in BC/DR testing: firms that account for at least 5 percent or more of the average dollar volume of Treasury securities reported to the Trade Reporting and Compliance Engine (TRACE) over the six-month period preceding the designation (provided that the cumulative dollar volume represented by all such firms amounts to at least 50 percent of all dollar volume in Treasury securities reported to TRACE during the applicable six-month period).  The Regulatory Notice indicates that FINRA expects to make designations in April and that testing will occur in October.

Regulatory Notice 18-09 is available here.

FCA Webpage on Capital Requirements Adds Important Transitional Arrangement

Posted in UK Developments

On March 5, the UK’s Financial Conduct Authority (FCA) published a webpage explaining that Article 493 of the Capital Requirements Regulation (CRR) has been updated by Article 1(2) of the IFRS 9 Regulation (an International Financial Report Standard promulgated by the International Accounting Standards Board). The CRR now incorporates a transitional arrangement,  allowing firms such as IFPRU investment firms (as defined below), to be exempted from large exposure limits, subject to the approval of the relevant national competent authorities (NCAs). Continue Reading

UK Government Guarantees Gibraltar Financial Services Firms’ Access to UK Markets

Posted in UK Developments

On March 8, the UK government’s Department for Exiting the European Union (DExEU) published a statement guaranteeing Gibraltar financial services firms with continued access to UK markets from now until 2020.

DExEU goes on to state that, in the meantime, the UK government will work closely with the government of Gibraltar to design a replacement framework that will last beyond 2020. It is intended that this framework will be based on common high standards of regulation and regulatory enforcement, and underpinned by modern arrangements for information-sharing, transparency and regulatory cooperation.

The statement is available here.