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On May 11, the Securities Exchange Commission’s (SEC) Division of Investment Management (IM) staff issued a Public Statement (Statement) strongly encouraging any investor interested in investing in mutual funds exposed to the Bitcoin futures market to carefully consider the risks involved with such investments.
Continue Reading SEC Division of Investment Management Staff Publishes Public Statement on Funds Registered Under Investment Company Act Investing in Bitcoin Futures Market

On July 14, the Financial Industry Regulatory Authority (FINRA) filed a proposed rule change to amend Rule 2360 (Options) to increase position limits on options on certain exchange-traded funds. FINRA has indicated that increasing the position limits for conventional options subject to the proposed rule change could lead to a more liquid and competitive market for these options, which will benefit customers interested in these products.
Continue Reading FINRA Proposes to Increase Positions Limits on Certain Options

On October 17, the Securities and Exchange Commission approved a rule proposal filed by Cboe Exchange, Inc. (CBOE) allowing the off-floor transfers of options positions by Trading Permit Holders (TPHs) under a new circumstance.

Under proposed Rule 6.9, positions in options listed on CBOE would be permitted to be transferred outside CBOE by a TPH in connection with transactions to purchase or redeem creation units of exchange-traded fund (ETF) shares between an “authorized participant” and the issuer of such ETF shares.
Continue Reading SEC Approves CBOE’s Proposed Rule Change Regarding the Off-Floor Transfer of Options Positions

In a letter dated April 26, the Division of Trading and Markets of the Securities and Exchange Commission granted no-action relief to Latour Trading LLC (Latour Trading) in connection with its proposed use of newly created exchange traded fund (ETF) shares to comply with the requirements set forth in Rule 204 (Close-Out Requirement) of Regulation SHO (Rule 204). This rule requires a participant of a registered clearing agency to: (1) deliver securities to a registered clearing agency for clearance and settlement on a long- or short–sale transaction in any equity security by an applicable settlement date; or (2) close out a fail-to-deliver position at a registered clearing agency in any equity security for a long- or short-sale transaction in that equity security by borrowing or purchasing securities of like kind and quantity, by the beginning of regular trading hours on the applicable close-out date.
Continue Reading SEC Grants No-Action Relief Regarding Created ETF Shares and Failure to Close Transactions

On January 11, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) released its 2016 examination priorities for investment companies, investment advisers, broker-dealers and transfer agents. The examination priorities highlight new and continuing areas of interest.
Continue Reading SEC 2016 Examination Priorities Focus on ETFs, Cybersecurity and Liquidity Controls for Fixed-Income Funds

On September 22, the Securities and Exchange Commission proposed a comprehensive package of rule reforms designed to enhance effective liquidity risk management by open-end funds, including mutual funds and exchange-traded funds (ETFs). Under the proposal, mutual funds and ETFs would be required to implement liquidity risk management programs and enhance disclosure regarding fund liquidity and redemption practices. The proposal is designed to better ensure investors can redeem their shares and receive their assets in a timely manner.
Continue Reading SEC Proposes Liquidity Management Rules for Mutual Funds and ETFs