On June 21, 2019, the Securities and Exchange Commission approved amendments to FINRA Rule 6730 (Transaction Reporting), which requires members to report transactions in US Treasury Securities executed to hedge a primary market transaction with an appropriate identifier. The amendments, further discussed in the June 8, 2018 edition of Corporate & Financial Weekly Digest,
US Treasury securities
Commissioner Peirce Dissents from SEC’s Rejection of Bitcoin-Based ETF
On February 26, Commissioner Hester Peirce of the Securities and Exchange Commission filed a dissent to the SEC’s decision to reject a proposed rule change from NYSE Arca that would have allowed it to list shares of an exchange-traded fund backed by bitcoin and US Treasury bills. In her dissent, Commissioner Peirce argued that the…
FINRA Board of Governors Approves Four Rule Proposals
During its July 18 and 19 meeting, the Board of Governors of the Financial Industry Regulatory Authority (FINRA) approved four new rule proposals. The proposals relate to the following topics:
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FINRA Requests Comment on Rules Applicable to Government Securities
The Financial Industry Regulatory Authority (FINRA) is requesting comment on the applicability of various FINRA rules to government securities. After undertaking a review of its rulebook, FINRA has identified several rules that currently exclude or do not clearly apply to US Treasury securities or other government securities. FINRA has determined that the application of these rules would benefit from additional industry comment.
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SEC Chair Discusses Treasury Market Reform
On October 24, Securities and Exchange Commission Chair Mary Jo White gave a keynote address titled “Prioritizing Regulatory Enhancements for the US Treasury Market” at the second annual conference, “The Evolving Structure of the US Treasury Market,” in New York.
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SEC Approves FINRA’s TRACE Amendments for US Treasury Securities
The Securities and Exchange Commission has approved the Financial Industry Regulatory Authority’s amendments to its Trade Reporting and Compliance Engine (TRACE) rules to provide for reporting of transactions in “US Treasury securities,” which includes all securities issued by the US Treasury Department, with the exception of savings bonds. As a consequence, the TRACE reporting requirements will apply to transactions in Treasury bills, notes, bonds and inflation-protected securities (referred to as “TIPS”), as well as separate principal and interest components of a US Treasury security that have been separated pursuant to the Separate Trading of Registered Interest and Principal of Securities (STRIPS) program operated by the Treasury Department. (The Corporate & Financial Weekly Digest edition of July 22, 2016 summarized FINRA’s proposed amendments.)
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FINRA Proposes To Require Members To Report Transactions in US Treasury Securities to TRACE
On July 19, the Financial Industry Regulatory Authority filed a proposed rule change with the Securities and Exchange Commission to amend its Trade Reporting and Compliance Engine (TRACE) reporting rules to require the reporting of transactions in all US Treasury Securities other than US savings bonds. This proposal would include transactions in US Treasury bills, notes and bonds, as well as separate principal and interest components of a US Treasury Security that have been separated pursuant to the Separate Trading of Registered Interest and Principal of Securities (STRIPS) program operated by the Treasury Department.
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FINRA Issues Notice on the Application of the Mark-Up Rule to Exempted Government Securities Transactions
The Financial Industry Regulatory Authority released Regulatory Notice 16-03, which discusses the Securities and Exchange Commission’s approval of amendments to FINRA Rule 0150 (Application of Rules to Exempted Securities Except Municipal Securities). The amendments codify the application of FINRA Rule 2121 (Fair Prices and Commissions) and its Supplementary Material .01 and .02 (the “mark-up rule”) to exempted government securities transactions, including those involving US Treasury securities. FINRA noted that any mark-ups and/or commissions related to government securities transactions must comply with both the mark-up rule and FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade).
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