Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Releases Updates to Custody Rule Frequently Asked Questions

Posted in Investment Advisers, Investment Companies and Investment Advisers

On June 5, the Securities and Exchange Commission’s Division of Investment Management staff (Staff) updated its “Staff Responses to Questions About the Custody Rule” (Custody Rule FAQs). The Custody Rule FAQs address questions regarding Rule 206(4)-2 of the Investment Advisers Act of 1940, the “Custody Rule.” The update to the Custody Rule FAQs specifically addressed concerns regarding the Staff’s February 2017 Guidance Update titled: “Inadvertent Custody: Advisory Contract Versus Custodial Contract Authority” (Guidance Update). The Guidance Update indicated that investment advisers may inadvertently have custody (Inadvertent Custody) of client assets due to provisions in a separate custodial agreement entered into between its advisory client and a qualified custodian that allow the investment adviser to instruct the custodian to disburse, or transfer, client funds or securities. Continue Reading

SEC Charges 13 Private Fund Advisers for Repeated Form PF Filing Failures

Posted in Investment Advisers, Investment Companies and Investment Advisers

On June 1, the Securities and Exchange Commission announced settlements with 13 registered investment advisers who repeatedly failed to annually file or update reports on Form PF. Form PF is a confidential reporting form required for private fund investment advisers managing $150 million or more of assets. The SEC began requiring that applicable registered investment advisers file an annual Form PF in 2012 under Rule 204(b)-1 of the Investment Advisers Act of 1940. Form PF requests, among other things, information about private funds’: asset values, investment strategies, performance, and use of borrowed money and derivatives. The SEC uses Form PF data to monitor industry trends, inform rulemaking, identify compliance risks, and target examinations and enforcement investigations. The SEC also shares Form PF data with the Financial Stability Oversight Council (FSOC), which assists FSOC in evaluating systemic risks potentially caused by hedge funds and other private funds. Continue Reading

FCA Confirms Change of London Address

Posted in Financial Markets, UK Developments

Following the UK Financial Conduct Authority’s (FCA) announcement in a consultation paper it first published on March 2, its London office will relocate over summer 2018.

From July 1, the FCA’s new registered address will be:

Financial Conduct Authority
12 Endeavour Square
E20 1JN Continue Reading

FCA Publishes “Dear CEO” Letter on Cryptoassets and Financial Crime

Posted in Digital Assets and Virtual Currencies, Financial Markets, UK Developments

The UK Financial Conduct Authority (FCA) has published a “Dear CEO” letter dated June 11, on cryptoassets and financial crime. The purpose is to ensure that banks adequately manage the financial crime risks associated with cryptoassets. The FCA defines cryptoassets as any publicly available medium of exchange that features a distributed ledger and a decentralized system for exchanging value. Continue Reading

UK Money Market Funds Regulations 2018 Published

Posted in Financial Markets, UK Developments

On June 11, the Money Market Funds Regulations 2018 (MMFR) were published and set to go into effect on July 21. The MMFR relates to the EU Regulation on Money Market Funds (EU MMF Regulation), and ensures the UK Financial Conduct Authority (FCA) can authorize money market funds (MMFs) and enforce the MMFR from the day that the EU MMF Regulation goes into effect.

The MMFR amends the Financial Services and Markets Act 2000 (FSMA) to allow the FCA to authorize funds as MMFs, as well as to exercise regulatory powers over MMFs. It further amends FSMA to grant the FCA powers to authorize, and intervene in respect of, unit trusts and contractual schemes (both being subsets of MMFs). Continue Reading

ESMA Releases Latest Double Volume Cap Data Under MiFID II

Posted in EU Developments, Financial Markets

On June 7, the European Securities and Markets Authority (ESMA) updated its public register with the latest set of double volume cap (DVC) data under the revised Markets in Financial Instruments Directive (MiFID II). The update follows last month’s update to the DVC public register (for more information, see the May 11, 2018 edition of Corporate & Financial Weekly Digest). Continue Reading

European Parliament Adopts EMIR 2.1 Proposal

Posted in Derivatives, EU Developments, Financial Markets

On June 12, the European Parliament (EP) issued a press release announcing its adoption in plenary of the proposed regulation to amend the European Market Infrastructure Regulation (EMIR) in respect of, among others, clearing, reporting and risk-mitigation techniques for over-the-counter derivatives contracts not cleared by a central counterparty (CCP). Continue Reading

FINRA Proposes Rule Change Regarding ATS Reporting of Transactions to TRACE

Posted in Broker-Dealer

The Financial Industry Regulatory Authority recently filed a proposed rule change with the Securities and Exchange Commission to amend FINRA Rule 6730 regarding transaction reporting. Currently under Rule 6730, US Treasury Securities transactions executed on an alternative trading system (ATS) must be reported to the Transaction Reporting and Compliance Engine (TRACE) by the ATS itself and by the counterparties to the trade, but only if the counterparties are FINRA members. The identities of counterparties that are non-FINRA members are not reported under the current iteration of the Rule. Continue Reading

CFTC Votes on a Final Rule and Two Proposed Rule Amendments

Posted in CFTC

On June 4, the Commodity Futures Trading Commission voted to approve a final rule to amend various portions of Part 49 of CFTC Regulations relating to swap data repository indemnification and related matters. The CFTC also voted to approve two rule proposals, including (1) proposed amendments relating to Volcker Rule restrictions on proprietary trading and private fund relationships and (2) proposed amendments to the swap dealer registration de minimis exception.

The final amendments to Part 49 of CFTC Regulations are available here.

The proposed amendments relating to the Volcker Rule, which were addressed in the June 1 edition of Corporate and Financial Weekly Digest are available here.

The proposed amendments relating to the swap dealer registration de minimis exception, which are further described in this issue of Corporate and Financial Weekly Digest, are available here.

CFTC Proposes To Maintain Swap Dealer Registration De Minimis Exception at $8 Billion

Posted in CFTC

The Commodity Futures Trading Commission is proposing various amendments to the de minimis exception from registration as a swap dealer. The de minimis exception provides that a person is not deemed to be a swap dealer unless its swap dealing activities exceed an aggregate gross notional amount of $8 billion measured over any 12-month period. However, the $8 billion amount is currently scheduled to decrease to $3 billion when the extended registration rule phase-in period ends on December 31, 2019. If the CFTC’s proposed amendments are adopted, the de minimis threshold will remain permanently at $8 billion. Continue Reading