Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Amends the Definition of “Smaller Reporting Company”

Posted in SEC/Corporate

On June 28, the Securities and Exchange Commission announced that it adopted amendments to the definition of “smaller reporting company,” which will allow more companies to take advantage of accommodations such as scaled disclosure. The amendments were adopted generally as proposed on June 27, 2016, with a few significant changes. The proposed amendments were previously covered in the July 8, 2016 edition of the Corporate & Financial Weekly Digest. Continue Reading

SEC Approves Amendment to Rule 701 and Issues a Concept Release Regarding Form S-8 and Rule 701

Posted in SEC/Corporate

As previously reported in the Corporate & Financial Weekly Digest edition of June 1, 2018, on May 24, President Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act (the Act), Section 507 of which directs the Securities and Exchange Commission to adopt an amendment to Rule 701 under the Securities Act of 1933. Rule 701 generally provides an exemption from the registration requirement imposed by the Securities Act for issuances of securities by a company that is not subject to the reporting requirements of the Securities Exchange Act of 1934 to its employees, directors and consultants under compensatory benefit plans. Pursuant to Section (e) of Rule 701, if the aggregate sales price or amount of securities sold by an issuer to investors in reliance on Rule 701 during any 12-month period exceeds $5 million, the issuer is required to deliver to investors an additional disclosure, including specified financial statements and risk factors. On July 18, consistent with the mandate under the Act, the SEC issued a final rule amending Section (e) of Rule 701 to increase the threshold for providing enhanced disclosure from $5 million to $10 million (subject to inflation adjustment every five years). Continue Reading

SEC Adopts New Form ATS-N and Amendments to Regulation ATS and Exchange Act Rule 3a1-1 to Enhance Transparency and Oversight of Alternative Trading Systems

Posted in Broker-Dealer

On July 18, the Securities and Exchange Commission adopted new Form ATS-N and amendments to Regulation ATS and Exchange Act Rule 3a1-1. The new requirements are designed to enhance transparency of alternative trading systems (ATSs) that trade stocks listed on a national securities exchange (NMS Stock ATSs) by requiring them to publicly disclose detailed information about their operations, including order types and market data used on the ATS, fees, the ATS’s execution and priority procedures, and any procedures to segment orders on the ATS. Continue Reading

CFTC Permits DCOs to Invest Customer Funds in European Sovereign Debt

Posted in CFTC, Derivatives

The Commodity Futures Trading Commission has issued an order granting limited relief from the provisions of CFTC Rule 1.25 that will allow derivatives clearing organizations (DCOs) to invest euro-denominated futures and cleared swap customer funds in euro-denominated sovereign debt issued by France and Germany. Among other requirements, the order provides that the dollar-weighted average of the time-to-maturity of a DCO’s portfolio of investments in each sovereign’s debt must not exceed 60 days. In addition, any direct investment in foreign sovereign debt must have a remaining maturity of 180 days or less. Continue Reading

Regulators Publish Changes to the Volcker Rule

Posted in Banking, CFTC, Dodd-Frank Developments

On July 17, the Federal Register published proposed changes to the Volcker Rule that were jointly approved by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Securities and Exchange Commission. As described in greater detail in the June 1, 2018 edition of the Corporate & Financial Weekly Digest, the proposed changes are intended to eliminate or modify requirements that the regulatory agencies believe are not necessary to effectively implement the statute without diminishing the safety and soundness of the entities subject to the Volcker Rule.

Comments on the proposed changes must be made by September 17.

The Federal Register publication is available here.

CFTC Issues Customer Advisory on Digital Coins and Tokens

Posted in CFTC, Digital Assets and Virtual Currencies

The Commodity Futures Trading Commission has issued an advisory warning customers of the dangers of purchasing digital coins or tokens. Among other things, the advisory warns customers that buying digital coins or tokens for speculative purposes carries significant risk and identifies various factors that could affect the current or longer-term value of a digital coin or token, including: Continue Reading

FSB Publishes Report on Cryptoassets

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

On July 16, the Financial Stability Board (FSB) published a report on the work of the FSB and standard setting bodies on cryptoassets. The report was delivered to the G20 Finance Ministers and Central Bank Governors ahead of their meeting on July 21 – 22.

The standard setting bodies, whose work is summarized in the FSB’s report, are: (1) the FSB itself; (2) the Committee on Payments and Market Infrastructures (CPMI); (3) the International Organization of Securities Commissions (IOSCO); and (4) the Basel Committee on Banking Supervision (BCBS). Continue Reading

OCIE Issues Risk Alert on Compliance Issues Related to Best Execution by Investment Advisers

Posted in Investment Advisers, Investment Companies and Investment Advisers

On July 11, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission issued a Risk Alert to provide investment advisers and other market participants with information concerning many of the most common deficiencies that OCIE staff has found in recent examinations of investment advisers’ compliance with their best execution obligations under the Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act best execution obligation requires an investment adviser to execute securities transactions for clients in such a manner that the client’s total costs, or proceeds in each transaction, are the most favorable under the circumstances taking into consideration the full range and quality of a broker-dealer’s services including, among other things, the value of research provided as well as execution capability, commission rate, financial responsibility, and responsiveness to the investment adviser. Furthermore, an investment adviser should periodically evaluate the execution quality of broker-dealers executing their clients’ transactions. Continue Reading

Draft Financial Regulators’ Powers Regulations 2018 Published

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

On July 16, a draft of the Financial Regulators’ Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 was published. The publication of the draft regulations follows the making of the first delegated legislation under the European Union (Withdrawal) Act 2018 earlier this month (discussed in the Corporate & Financial Weekly Digest edition of July 13, 2018) and provides one of the first indications of the UK approach to “onshoring” EU legislation as part of the United Kingdom’s withdrawal from the European Union (Brexit). Continue Reading

ESMA Updates Benchmarks Regulation Q&As

Posted in EU Developments, Financial Markets

On July 17, the European Securities and Markets Authority (ESMA) updated its Q&As on the EU Benchmarks Regulation (BMR). The Q&As aim to promote common supervisory approaches and practices in the day-to-day application of the BMR.

The update to the Q&As on the BMR clarifies:

  1. when a calculation agent is considered a user of benchmarks if it is appointed by an issuer of securities; and
  2. whether a benchmark can qualify as a “regulated-data benchmark” if a third party is involved in the process of obtaining the data.

ESMA’s prior update to the Q&As on the BMR was released in March 2018 and further details of that update can be found in the Corporate & Financial Weekly Digest edition of March 30, 2018.

The updated Q&As on the BMR are available here.