Division of Trading and Markets

On December 18, 2020, the Securities and Exchange Commission announced the creation of a joint venture among multiple SEC divisions and offices to coordinate roles related to the regulation of security-based swaps (SBS) and provide oversight of entities that will be required to register with the SEC (SBS entities).
Continue Reading SEC Announces New Internal Security-Based Swaps Joint Venture

On October 22, the staff of the Division of Trading and Markets of the Securities and Exchange Commission (DTM) issued a no-action letter (the No-Action Letter) to the Financial Industry Regulatory Authority (FINRA) providing time-limited relief for broker-dealers operating fully paid lending programs (FPL Programs) in which they borrow fully paid and excess margin securities from their customers without complying with the requirement that the broker-dealer physically deliver collateral supporting the loan to the customer making the loan. Paragraph (b)(3) of SEC Rule 15c3-3 (the customer protection rule) requires that a broker-dealer that borrows fully paid or excess margin securities from a customer enter an agreement with such customer that requires the broker-dealer to:
Continue Reading SEC Staff Issues No-Action Relief Addressing Customer Protection Rule Violations Despite the Objection of Two Commissioners

On September 28, the Securities and Exchange Commission announced that it will hold a roundtable on October 26 at which staff from the SEC and the Financial Industry Regulatory Authority (FINRA) will discuss initial observations on the implementation of Regulation Best Interest and Form CRS.
Continue Reading SEC Staff to Host Roundtable on Regulation Best Interest and Form CRS on October 26

On June 22, Securities and Exchange Commission Chairman Jay Clayton and Brett Redfearn, the Director of the SEC’s Division of Trading and Markets, spoke together on an SEC-sponsored virtual forum about modernizing the US Equity Market Structure. Chairman Clayton identified the market for thinly traded securities, retail fraud and National Market System (NMS) market data and access as three current targets for SEC initiatives.
Continue Reading SEC Chairman Speaks on Modernizing US Equity Market Structure

On March 24, the Securities and Exchange Commission, on behalf of the staffs of the Division of Corporation Finance, the Division of Investment Management and the Division of Trading and Markets issued an announcement with respect to the authentication document retention requirements of Rule 302(b) of Regulation S-T in light of health, transportation and other logistical issues raised by the spread of COVID-19. Rule 302(b) requires that each signatory manually sign a signature page or other document authenticating his or her signature that appears in typed form within the electronic filing with the SEC.
Continue Reading SEC Staff Issues Statement Regarding Authentication Documentation Retention Requirements in Light of COVID-19 Concerns

On July 8, in response to questions raised by market participants regarding the application of federal securities laws and the Financial Industry Regulatory Authority (FINRA) rules to the custody of digital asset securities and transactions, the staffs of the Division of Trading and Markets (the Division) and FINRA issued a joint statement. The joint statement seeks to articulate and clarify various considerations pertinent to many of the questions raised, particularly with respect to the Securities and Exchange Commission’s Customer Protection Rule applicable to SEC-registered broker-dealers.
Continue Reading Division of Trading and Markets and FINRA Staffs Issue Joint Statement on Broker-Dealer Custody of Digital Asset Securities

On March 19, the Financial Industry Regulatory Authority, Inc. (FINRA) released Regulatory Notice 19-08 to provide guidance to members for reporting lease assets and liabilities on their FOCUS reports. FINRA’s notice follows an October 2018 No-Action Letter (the No-Action Letter) in which the staff of the Securities and Exchange Commission’s Division of Trading and Markets (the Staff) addressed the treatment of operating leases under Securities Exchange Act Rule 15c3-1 in connection with the Financial Accounting Standards Board’s Accounting Standards Update for Leases.
Continue Reading FINRA Issues Guidance on FOCUS Reporting for Operating Leases

The Division of Trading and Markets (Division) of the Securities and Exchange Commission has updated its no-action relief to broker-dealers and over-the-counter (OTC) derivatives dealers from the requirement to file annual and supplemental reports with the SEC in paper form. The Division had previously issued a no-action letter in December 2015 that provided relief to broker-dealers and OTC derivatives dealers from the requirement to file the reports in paper form so long as the reports are filed using the SEC’s EDGAR system. The 2015 letter detailed the procedures for filing reports using the EDGAR system.
Continue Reading SEC Simplifies Process for Electronically Filing Broker-Dealer Annual Reports