On August 13, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 18-25 to remind Alternative Trading Systems (ATS) to evaluate their supervisory systems to ensure compliance with their supervision obligations, including, without limitation, with respect to business continuity, recordkeeping, Regulation ATS, Regulation NMS, Regulation SHO and the SEC’s Market Access Rule, to the extent
Janet M. Angstadt
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
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.
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SEC Proposes New Approval Process for Certain ETFs
On June 28, the Securities and Exchange Commission voted to propose a new rule and set of form amendments related to the approval process for certain exchange-traded funds (ETFs) that operate as open-ended funds (Proposal). Among other things, the Proposal calls for the creation of a new rule 6c-11 of the Investment Company Act of…
SEC Division of Trading and Markets Director Gives Remarks Regarding Regulation Best Interest
On May 22, Brett Redfearn, the Director of the Securities and Exchange Commission’s Division of Trading and Markets spoke at the Financial Industry Regulatory Authority’s Annual Conference regarding the newly proposed Regulation Best Interest. (For a more complete discussion of Regulation Best Interest, please refer to Katten’s “SEC Proposes Fiduciary Rule for Broker-Dealers” advisory, available here.) Director Redfearn noted that he views Regulation Best Interest as a “significant change from the status quo for broker-dealers that provide advice” that builds upon current regulations. He further noted that Regulation Best Interest tries to achieve two goals: (1) enhancing the quality of broker-dealer recommendations to retail customers; and (2) preserving the “pay as you go” model as a viable choice for investors seeking recommendations about securities.
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FINRA Amends Rule 3310 to Reflect FinCEN’s Customer Due Diligence Requirements
The Financial Industry Regulatory Authority (FINRA) filed amendments to Rule 3310 to conform to the Financial Crimes Enforcement Network’s (FinCEN’s) customer due diligence requirements. Specifically, the amendments to Rule 3310 require each member to include in its anti-money laundering program appropriate procedures for conducting ongoing customer due diligence, including but not limited to, “[u]nderstanding the…
FINRA Publishes Regulatory Notice Regarding 2018 GASB Accounting Support Fee
On April 17, the Financial Industry Regulatory Authority issued Regulatory Notice 18-12, which announces that FINRA will collect a total of $8,346,300 to fund the annual budget of the Governmental Accounting Standards Board (GASB) by collecting $2,086,575 from member firms each calendar quarter beginning in April 2018.
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SEC Proposes Best Interest Standard for Broker-Dealers
On April 18, the Securities and Exchange Commission proposed a new rule under the Securities Exchange Act of 1934, creating a standard of conduct for registered broker-dealers who make recommendations of securities transactions or investment strategies involving securities to a retail customer. The best interest standard requires broker-dealers to act in the best interest of the retail customer at the time a recommendation is made, without placing the interests of the broker-dealer ahead of the interest of the retail customer.
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SEC Confirms Record Retention Requirements With Third-Party Recordkeeping Services
On April 12, the staff of the Securities and Exchange Commission issued a letter in response to an inquiry from staff of the Financial Industry Regulatory Authority, concerning broker-dealers’ recordkeeping obligations under Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4 thereunder.
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FINRA Requests Comment on the Effectiveness and Efficiency of Its Carrying Agreements Rule
On March 23, the Financial Industry Regulatory Authority (FINRA) announced it is conducting a retrospective review of FINRA Rule 4311, governing carrying agreements. As part of its review, FINRA has requested comment to determine the Rule’s effectiveness and efficiency.
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SEC Releases Statement on Platforms Trading Digital Assets
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.
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