Month: <span>May 2022</span>

United States: All Square: Amended CFTC “Block Trade” Definition Officially Effective

May 31 2022

On 25 May 2022, the U.S. Commodity Futures Trading Commission’s (CFTC) block trade no-action relief, provided in CFTC No-Action Letter (NAL) 20-35, expired. As of that day, all swap execution facilities (SEFs) are required to comply with the amended definition of “block trade” provided under CFTC Regulation 43.2.

“Block trades” are large, privately negotiated (either directly or through a broker) swap transactions that meet certain quantity thresholds. Block trades must qualify for execution apart from the SEF’s order book or trading platform in accordance with the relevant SEF’s rules, pursuant to CFTC Regulations.

Europe: AIFMD II – Proposed Refinements to Loan Originating Fund Proposals

May 31 2022

By: Philipp Riedl

On 18 May 2022, the Rapporteur submitted to the Committee on Economic and Monetary Affairs (ECON) a report suggesting changes to the EU Commission’s envisaged regulation of loan originating funds under its proposed AIFMD amendments (AIFMD II). The report includes some proposed relief, notably:

United States: What’s in a Name? SEC Proposes Amendments to Fund Names Rule & ESG Disclosure Requirements

May 26 2022

By: Clair Pagnano

In a significant departure from the SEC’s long-standing position on the use of fund names, the SEC is proposing amendments to Rule 35d-1 that would expand the Names Rule to include terms denoting strategies, thereby subjecting funds that use the terms “Growth,” “Value,” and funds that use ESG-related terms in the fund’s name to the rule. It would also prohibit funds from using ESG-related terms in their names if ESG factors are considered to the same extent as other screening factors in the management of the fund (so-called “integration” funds). These and other key aspects of the proposed rule include:

Australia: ESG Investing a target for the New Government?

May 23 2022

By Jim Bulling and Kithmin Ranamukhaarachchi

A Federal election in Australia was held at the weekend which resulted in a change of Government. One of the signature priorities of the incoming Government is to introduce policies which more comprehensively address climate change challenges.

United States: MNPI (aka, “My Next Possible Investigation”): The SEC’s Scrutiny of MNPI Compliance Programs

May 11 2022

By: Keri E. Riemer

The SEC’s Division of Examinations recently released a risk alert describing a pattern of deficiencies relating to investment advisers’ use of material non-public information (MNPI). The Staff highlighted the following as areas of concern:

Alternative Data. Advisers that used data from non-traditional sources beyond company financial statements, filings, and press releases appeared to not have adopted or implemented written policies and procedures reasonably designed to address the potential risk of receiving and using MNPI through such sources.
“Value-Add Investors”. Advisers did not have—or did not appear to implement—adequate policies and procedures related to investors who are more likely to possess MNPI (e.g., officers or directors of a public company, asset management firm principals or portfolio managers, and investment bankers).
Expert Networks. Advisers did not appear to adequately track calls with expert network consultants, retain detailed notes from the calls, and monitor trading activity related to companies in industries similar to those discussed during the calls.
Deficiencies related to Access Persons. The Staff identified advisers who failed to correctly identify “access persons” (as defined in Rule 204A-1(c) under the Investment Advisers Act), ensure that those access persons obtain pre-approval for investments in IPOs and other similar offerings, and maintain adequate records of the holding and transactions of access persons.

The Staff also encouraged industry participants to review their practices, policies, and procedures regarding the topics addressed above. We recently issued a client alert which describes the risk alert in greater detail and provides takeaways for industry participants.

Archive: May 2022