On November 8, the European Securities and Markets Authority (ESMA) published a final report proposing new draft regulatory technical standards (RTS) contained in a draft Delegated Regulation that would amend the three European Commission Delegated Regulations on the clearing obligation under the European Markets and Infrastructure Regulation (EMIR).
Continue Reading ESMA Proposes Regulatory Change To Support the Brexit Preparations of Counterparties to Uncleared OTC Derivatives

On September 24, the Financial Industry Regulatory Authority (FINRA) issued a Regulatory Notice (Notice) reminding firms of their applicable obligations when publishing a quote in an OTC security, in addition to filing a Form 211. Securities Exchange Act of 1934 (SEA) Rule 15c2-11 prevents a broker-dealer from initiating quotations in an OTC security unless such broker-dealer has reviewed and verified that certain information about the issuer is accurate and from a reliable source. FINRA Rule 6432 requires a firm to file a Form 211 with FINRA to show compliance with SEA Rule 15c2-11.
Continue Reading FINRA Reminds Members of Obligations Related to OTC Securities Quoted by a Filed Form 211

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

On September 22, the European Commission adopted two delegated regulations to implement new EU-wide rules on “indirect clearing arrangements” for the exchange-traded derivatives market (ETD Delegated Regulation) and for the over-the-counter (OTC) derivatives market (OTC Delegated Regulation). The term “indirect clearing arrangement” refers to a set of relationships—also called a “chain”—where at least two intermediaries are interposed between an end-client and the relevant central counterparty (CCP). The most basic indirect clearing chain, therefore, involves the following four entities: the CCP; a clearing member of the CCP (Clearing Member); the client of the Clearing Member that is itself an intermediary (Direct Client); and the client of such Direct Client (Indirect Client). Longer chains are permitted in certain limited circumstances. The OTC Delegated Regulation amends earlier indirect clearing rules for the OTC derivatives market in order to ensure that the provisions of the ETD Delegated Regulation and the OTC Delegated Regulation are identical.
Continue Reading European Commission Adopts Final Rules on Indirect Clearing

On July 12, in his first major address since becoming Chairman of the Securities and Exchange Commission earlier this year, Jay Clayton outlined his vision for the SEC under his Chairmanship based upon eight guiding “principles” and his approach for implementing those principles into practice.

In the speech, delivered at the Economic Club of New York, Chairman Clayton stressed that protection of investors—particularly retail investors (or as Chairman Clayton referred to them, the “Main Street Investor”)—will be a fundamental principle underlying the policies and actions of the SEC under his leadership.
Continue Reading SEC Chairman Clayton Makes First Public Speech Outlining His Vision for the Commission

The Financial Industry Regulatory Authority has issued a notice clarifying the “as soon as practicable” requirement under FINRA reporting rules for transactions effected over-the-counter (OTC). As background, FINRA rules provide that OTC trades in national market system (NMS) securities that are executed during the hours that a FINRA trade reporting facility is open must be reported for dissemination purposes as soon as practicable, but no later than 10 seconds, following trade execution.
Continue Reading FINRA Interprets “As Soon As Practicable” Requirement Under Trade Reporting Rules

On March 29, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed amendment to FINRA Rule 6184 (Transactions in Exchange-Traded Managed Fund Shares (NextShares)). The amended rule would require the FINRA/NASDAQ Trade Reporting Facility (FINRA/NASDAQ TRF) to provide market participants with access to the final trade price for each over-the-counter (OTC) transaction in NextShares reported to the FINRA/NASDQ TRF for public dissemination purposes.
Continue Reading FINRA Proposes Amendment to Transactions in Exchange-Traded Managed Fund Shares Rule