On June 27, the Commodity Futures Trading Commission issued an Order of Registration (Order) approving Clear Markets North America, Inc. as a fully registered Swap Execution Facility (SEF). After reviewing Clear Markets’ application, the CFTC determined that Clear Markets is in compliance with the Commodity Exchange Act (CEA) and the CFTC’s regulations applicable to SEFs. As a registered SEF, Clear Markets will be required to comply with all current and future SEF-applicable provisions of the CEA and CFTC requirements. Currently, there are 22 SEFs, including Clear Markets, that are fully registered with the CFTC.
Continue Reading CFTC Approves Clear Markets North America, Inc. as a Registered Swap Execution Facility

The Securities and Exchange Commission has announced the Customer Protection Rule Initiative (Initiative), under which broker-dealers that have failed to comply with the SEC’s Customer Protection Rule (SEC Rule 15c3-3) may self-report to the SEC in exchange for potentially favorable settlement terms.
Continue Reading SEC Announces Self-Reporting Initiative for Broker-Dealers Who Have Failed To Comply With Its Customer Protection Rule

On June 15, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed amendment to FINRA Rule 4240 (Margin Requirements for Credit Default Swaps). FINRA Rule 4240 implements a pilot program that imposes margin requirements for certain credit default swaps that are also security-based swaps. The proposed amendment would allow for

On June 15, the Securities and Exchange Commission approved on an accelerated basis proposed amendments to FINRA Rule 4210 to establish margin requirements for TBA transactions, Specified Pool Transactions and certain forward transactions involving collateralized mortgage obligations (collectively, Covered Agency Transactions).
Continue Reading SEC Approves Revised FINRA Margin Requirements Rule

On June 8, the Securities and Exchange Commission announced the adoption of the Securities Exchange Act of 1934 (Exchange Act) Rules 15Fi-1 and 15Fi-2, which establish new trade acknowledgement and verification requirements for security-based swap (SBS) entities entering into SBS transactions.
Continue Reading SEC Adopts Trade Acknowledgement and Verification Rules for Security-Based Swaps

On June 6, the Financial Industry Regulatory Authority released Regulatory Notice 16-21, which announced the Securities and Exchange Commission’s approval of an amendment to NASD Rule 1032(f).
Continue Reading FINRA Releases Notice Regarding the SEC’s Approval of Algorithmic Trading Developer Registration Requirements

The Commodity Futures Trading Commission has proposed to amend its order exempting specified electric energy-related transactions administered by regional transmission organizations (RTOs) and independent system operators (ISOs) from certain provisions of the Commodity Exchange Act (CEA). As set forth in the order, these transactions currently are exempt from all provisions of the CEA with the exception of the CFTC’s general anti-fraud and anti-manipulation authority and scienter-based prohibitions under CEA Sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9 and 13, and any regulations promulgated thereunder.
Continue Reading CFTC Proposes to Amend RTO-ISO Order

On May 5, the International Swaps and Derivatives Association, Inc. (ISDA) launched the ISDA Resolution Stay Jurisdictional Modular Protocol (Protocol), which is designed to assist market participants in complying with new regulations governing the cross-border enforceability of stays on contractual termination rights. The Protocol was developed in reaction to new regulatory changes, such as a framework established by the Financial Stability Board, whereby various national regulators are requiring certain banks in their jurisdiction to obtain counterparty consent for statutory stays on early termination rights, regardless of the contract’s governing law. These changes are designed to reduce the uncertainty regarding the cross-border enforceability of such stays.
Continue Reading ISDA Launches Protocol Regarding Cross-Border Enforceability of Stays on Contractual Termination Rights

On May 2, the Commodity Futures Trading Commission approved an amendment to CFTC Regulation 23.500(i) (Amendment) that modifies the definition of “portfolio reconciliation” such that swap dealers and major swap participants only need to exchange the “material terms” of their swaps with their counterparties.
Continue Reading CFTC Amends Its Swap Portfolio Reconciliation Requirements

On May 3, the Board of Governors of the Federal Reserve System (Board) reviewed a draft rule proposal that would require any US bank holding company identified as a global systemically important banking organization (GSIB), its subsidiaries and the US operations of any foreign GSIB (Covered Entities) to comply with new restrictions regarding non-cleared qualified financial contracts (QFCs).The Board currently estimates that the proposed rule would apply to 29 banking organizations, including eight US holding companies and approximately 21 foreign banking organizations.
Continue Reading Federal Reserve Board Proposes Restrictions on Qualified Financial Contracts Used by Systemically Important Banking Organizations