Stanley V. Polit

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On July 16, the Financial Industry Regulatory Authority (FINRA) published separate guidance related to the public offering review process (Public Offering Guidance) and private placement filings (Private Placement Guidance). FINRA rules impose a number of obligations on member firms participating in the distribution of shares in a public offering. The Public Offering Guidance outlines, among other items, the use of FINRA’s Public Offering System, the handling of potential conflicts of interest related to a public offering and the types of public offering reviews available from FINRA’s Corporate Financing Department. Similarly, the Private Placement Guidance summarizes FINRA rules related to private placements, including the corresponding filing requirements, and provides guidance with respect to compliance with the rules. Both sets of guidance also include an outline of FINRA’s review process and provide links to additional resources.
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On July 12, the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission a proposed rule change (Rule Change) to amend FINRA Rule 7470, which provides certain member firms with an exemption from certain order recording and data transmission requirements. The Rule Change extends for three years FINRA’s ability to exempt certain member firms from the recording and reporting requirements of the Order Audit Trail System Rules for manual orders received by such members. The Rule Change is intended to extend the exemption period such that it more closely syncs with the December 2021 deadline for all broker-dealers that are FINRA members or members of a national securities exchange to report order information to the Consolidated Audit Trail.
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On June 20, the National Futures Association (NFA) issued Notice to Members I-19-15 (Notice), announcing the approval of a $1,750 annual surcharge (Surcharge) on certain NFA members, including futures commission merchants for which NFA is the designated self-regulatory organization, introducing brokers, commodity pool operators and commodity trading advisors that are approved as swap firms pursuant to NFA Bylaw 301(l)1. The Commodity Futures Trading Commission recently approved an amendment to NFA Bylaw 1301 that allows for the Surcharge (for additional information regarding the amendment, please refer to the May 24, 2019 edition of Corporate & Financial Weekly Digest). The NFA Board of Directors determined to impose the Surcharge because NFA does not currently assess any fees related to its oversight of the swaps activities of member firms.
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On May 21, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-19 (Notice), which reminds applicable member firms that they must register with FINRA CAT, LLC (FINRA CAT) on or before June 27 for purposes of reporting to the Consolidated Audit Trail (CAT). This reporting requirement relates to 1) member firms or national securities exchanges that handle orders or quotes in National Market System (NMS) stocks, over-the-counter equity securities or exchange listed options (each, an Industry Member); and 2) third-party CAT reporting agents that are or will be authorized to submit data to the CAT on behalf of an Industry Member. The CAT rules do not provide for any firms to be excluded or exempted from this reporting requirement.…
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On May 21, the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission a proposed rule (Rule Change) extending the implementation date for FINRA Rule 4240, which implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps that are security-based swaps. The implementation date has…

On April 25, the Commodity Futures Trading Commission approved a proposed rule intended to improve the quality of swap data and update and streamline regulations related to the operations and governance of swap data repositories (SDRs) (Rule Proposal). Among other items, the Rule Proposal is intended to update requirements related to the following: 1) the…

On April 29, the Commodity Futures Trading Commission proposed a series of amendments to regulations that apply to derivatives clearing organizations (DCOs) under Part 39 of the CFTC’s regulations, which implements the statutory core principles for DCOs (Rule Proposal). The Rule Proposal is intended, among other things, to streamline the DCO registration and reporting process,…

On May 1, the Commodity Futures Trading Commission’s Division of Clearing and Risk and Office of the Chief Economist jointly issued, CCP Supervisory Street Tests: Reverse Stress Test and Liquidation Stress Test (Stress Test), which is a two-part report covering the results of 1) a reverse stress test of central counterparties (CCPs) or clearinghouses resources; and 2) an analysis of stressed liquidation costs.…
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On April 5, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed rule change to extend the pilot program related to FINRA Rule 6121.02 (Market-wide Circuit Breakers in NMS Stocks), which provides a methodology for determining when to halt trading in all national market system stocks due to extraordinary market…