Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

AFME and ISDA Publish Paper on Brexit Contractual Continuity Issues in OTC Derivatives

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

On July 30, the Association of Financial Markets in Europe (AFME) and the International Swaps and Derivatives Association, Inc. (ISDA) released a paper outlining the challenges UK and EU firms will face in relation to legacy over-the-counter (OTC) derivative contracts following the United Kingdom’s departure from the European Union (Brexit). Continue Reading

ESMA Publishes First Systematic Internalizer Calculations Data for Investment Firms Under MiFID II

Posted in EU Developments, Financial Markets

On August 1, the European Securities and Markets Authority (ESMA) published the first tranche of data for market participants to determine whether they are systematic internalizers (SIs) in equities, equity-like instruments and bonds under the revised Markets in Financial Instruments Directive (MiFID II). Continue Reading

SEC Disapproves BZX Proposed Rule Change to List Shares of Bitcoin-Based Exchange-Traded Product

Posted in Broker-Dealer, Digital Assets and Virtual Currencies

On July 26, the Securities and Exchange Commission disapproved a Bats BZX Exchange proposed rule change that would have permitted the listing and trading of shares of the Winklevoss Bitcoin Trust (Trust) on BZX. This is the SEC’s second disapproval of the proposed rule change as it has previously disapproved the exchange’s original proposal in March 2017. Notably, Commissioner Hester Peirce dissented from the SEC’s most recent disapproval. Continue Reading

NYSE Proposes to Amend Rule Requiring Registered Broker-Dealers to be Members of FINRA or Another Exchange

Posted in Broker-Dealer

On July 12, the New York Stock Exchange (NYSE) proposed an amendment to NYSE Rule 2, which requires that an NYSE member also be a member of the Financial Industry Regulatory Authority (FINRA) or another registered securities exchange. As a part of the consolidation of the National Association of Securities Dealers and NYSE Regulation to form FINRA, NYSE Rule 2 was revised in 2007 to require each NYSE member organization to become a FINRA member. Eventually, NYSE amended the rule so that NYSE members could be members of FINRA or a registered securities exchange. Continue Reading

FINRA Amends Rules to Provide an Option for Simplified Arbitration

Posted in Broker-Dealer

On July 23, the Financial Industry Regulatory Authority (FINRA) released Regulatory Notice 18-21, which summarizes recent amendments to the Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code). Continue Reading

CFTC Proposes Improvements to Initial Margin Segregation Rule

Posted in CFTC, Derivatives, Dodd-Frank Developments

The Commodity Futures Trading Commission KISS initiative has finally produced some substantive results for swap dealers in the form of proposed amendments to Subpart L of the CFTC’s regulations (“Segregation of Assets in Uncleared Swap Transactions”) that were issued for comment on July 24. Subpart L (which encompasses CFTC Regulations 23.700-704) has been problematic for swap dealers since it was adopted early in 2014 because of the compliance challenges created by the extremely complicated and prescriptive nature of these provisions. Continue Reading

CFTC Proposes Amendments to Its Position Limit Rules

Posted in CFTC

The Commodity Futures Trading Commission is proposing to amend its position limits rules for security futures products (SFPs) to provide exchanges that list SFPs with greater discretion in setting limit levels, allowing the exchanges to provide a more effective risk management tool.

Specifically, the proposed CFTC amendment would: (1) increase the default level of equity SFP position limits to 25,000 (100-share) contracts, from 13,500 (100-share) contracts; and (2) modify the criteria for setting a higher level of position limits and position accountability levels. Continue Reading

NFA Interpretive Notice Regarding Engaging in Virtual Currency

Posted in CFTC, Derivatives, Digital Assets and Virtual Currencies

On July 20, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission for approval a proposed interpretive notice regarding Disclosure Requirements for NFA Members Engaging in Virtual Currency Activities. The new disclosure obligations will apply to all NFA members engaging in transactions in virtual currency derivatives and virtual currency, as well as other activities in underlying or spot virtual currencies. Continue Reading

HM Treasury Publishes Draft Version of the EEA Passport Rights Regulations 2018

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

On July 24, HM Treasury published its draft version of the European Economic Passports Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (draft Regulations).

The purpose of the draft Regulations is to remove references to the passporting framework set out in the Financial Services and Markets Act 2000 and in other UK legislation. The reason for this is if the United Kingdom leaves the European Union without a deal, there will be no agreed legal framework on which the passporting system can continue; therefore references in UK legislation to the passporting system would become “deficient” for the purposes of the European Union (Withdrawal) Act 2018 (for further details, see the Corporate & Financial Weekly Digest edition of June 29, 2018). Continue Reading