Global Regulatory Development – Page 13 – Global Investment Law Watch

United States: As the WORM Turns: SEC Provides Alternative Recordkeeping Requirements for Brokers

Oct 12 2022

By: Eden L. Rohrer, Chloe Vargas, and Raymond F. Jensen

On October 12, 2022, the SEC voted to adopt new electronic recordkeeping requirements for broker-dealers in an effort to modernize recordkeeping requirements and to allow broker-dealers to use new technologies to satisfy their obligations. The new recordkeeping requirements will amend the Securities Exchange Act of 1934 (“Exchange Act”) Rule 17a-4 (“Rule 17a-4”) for broker-dealers and Exchange Act Rule 18a-6 (“Rule 18a-6”) for Security-Based Swap Dealers, and Major Security-Based Swap Participants.

Significant to broker-dealers is that they will no longer be required to preserve electronic records in a non-rewritable, non-erasable or read once, write many (“WORM”) format. The new rule is technology neutral, allowing broker-dealers to adopt new technologies. The amended rule will eliminate references to outdated technology such as “micrographic media,” “microfilm or microfiche,” and “optical disk technology (including CD-ROM),” in their heyday when the rule was adopted in 1997.

Australia: Regulatory update – 10 October 2022

Oct 10 2022

By Jim Bulling and Hugo Chow

ASIC sues Latitude Finance Australia and Harvey Norman Holdings for allegedly misleading interest free advertising

ASIC is suing Latitude Finance Australia (Latitude) and Harvey Norman Holdings Ltd (Harvey Norman) over the promotion of interest-free payment methods.

ASIC alleges that advertisements which included “no deposit”, “interest free” payment options over specified terms for purchases at Harvey Norman were misleading as they did not disclose that consumers could only use these payment options if they applied for and used a Latitude GO Mastercard, and that Harvey Norman misrepresented the actual costs of these payment options as they did not adequately disclose the establishment fees and monthly account fees.

United States: CFTC Orders 11 Banks to Pay Over $710 Million for Illegal Use of Texting Apps

Oct 03 2022

By: Cheryl L. Isaac and Matthew J. Rogers

On September 27, 2022, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of charges against the swap dealer (“SD”) and futures commission merchant (“FCM”) affiliates of 11 financial institutions totaling more than $710 million. The action, filed and settled on the same day and brought in tandem with a related Securities and Exchange Commission (“SEC”) action, charged the institutions with failing to meet certain CFTC recordkeeping requirements. Specifically, the Commission determined that the SDs / FCMs failed to stop their employees from communicating internally and externally using unapproved communication methods such as WhatsApp or Signal.

United States: CFTC Reaches Settlement with Oil and Natural Gas Advisor for Failure to Register as a SEF

Sep 29 2022

By: Cheryl L. Isaac and Spencer D. Warkentin

On September 26, 2022, amidst a flurry of other enforcement actions, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of its administrative action against Asset Risk Management, LLC (“ARM”) in the amount of $200,000. The CFTC found that ARM operated an unregistered swap execution facility (“SEF”) for a period of 5 years, from September 2017 to the present.

United States: CFTC Proposes New Rules for Derivatives Clearing Organizations

Aug 23 2022

By: Cheryl L. Isaac and Matthew F. Phillips

On July 27, 2022, the Commodity Futures Trading Commission (“CFTC”) proposed a series of amendments to the Commodity Exchange Act (the “Exchange Act”) designed to enhance its governance standards for Derivatives Clearing Organizations (“DCOs”).

United States: CFTC Extends Position Limits Aggregation Relief

Aug 23 2022

By: Cheryl L. Isaac and Michael G. Lee

On August 10, 2022, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) issued a no-action letter (NAL), CFTC Staff Letter No. 22-09 (NAL 22-09), temporarily extending relief regarding certain position aggregation requirements until the earlier of either August 12, 2025 or the effective date of any relevant rulemaking. This relief was first provided in CFTC Staff Letter No. 17-37 (NAL 17-37) on August 10, 2017, and subsequently extended in CFTC Staff Letter No. 19-19 (NAL 19-19) on July 31, 2019. The extended relief provided by NAL 19-19 was set to expire on August 12, 2022, two days before the issuance of NAL 22-09. The DMO stated that it would use the newly extended time to assess the impact of the relief, including whether it hinders the CFTC staff’s ability to conduct market surveillance, particularly in light of so many new contract markets and market participants becoming subject to the Position Limits for Derivatives Final Rule. The CFTC will also consider a rulemaking process to codify the relief set forth in NAL 22-09.

JAPAN: Proposed Code of Conduct for ESG Evaluation and Data Providers Presents Significant Implications for Asset Management and Investor Communities

Aug 05 2022

By Yuki Sako

On 12 July 2022, as widely anticipated, the Financial Services Agency of Japan (“FSA”) proposed “the Code of Conduct for ESG Evaluation and Data Providers” (“Proposed Code”), and is soliciting comments from the public until 5 September 2022.

The stated focus of the Proposed Code is to provide a set of principles and guidelines for ESG evaluation and data providers (“Provider(s)”) that would require Providers who decide to endorse such code to “comply or explain” such code, i.e., a Provider would be required to comply with, or provide an explanation as to why the Provider is departing from, such code.

Europe: Systemically important outsourced service providers, eg cloud services, to be identified and regulated in the UK

Jul 08 2022

By: Kai Zhang

In an 8 June 2022 policy statement, the UK Government proposes a specific regime for supervising “critical” service providers to the financial services industry. This is to address concentration risk as many regulated firms rely on a few large service providers whose failure could potentially threaten the stability of, or confidence in, the UK’s financial system. The Government observes that in 2020 over 65% of UK regulated firms used the same four cloud providers for cloud infrastructure services.

United States: Grayscale Appeals to DC Circuit on SEC Denial of Bitcoin ETP

Jul 05 2022

By: Stacy L. Fuller, Clifford C. Histed, Cheryl L. Isaac, Richard F. Kerr, Keri E. Riemer, and Peter J. Shea

On Thursday, Grayscale Investments, LLC (Grayscale) filed suit against the Securities Exchange Commission (SEC) in the D.C. Circuit asking the court to reconsider the agency’s rejection of listing a spot Bitcoin ETP on the New York Stock Exchange (NYSE). In its appeal, Grayscale argued that the SEC’s ruling regarding its spot Bitcoin ETP was “arbitrary and capricious,” because it disregarded facts about the ETP and erroneously determined that listing the ETP would be in contravention of NYSE’s duties under the Securities Exchange Act of 1934.

Australia: ASIC Provides Practical Guidance as Long Awaited CCIV Arrives

Jun 23 2022

By Kane Barnett and Bernard Sia

ASIC has published Information Sheet 272 (INFO 272) and Report 728 (REP 728) on the eve of the corporate collective investment vehicle’s (CCIV) commencement.

With the commencement date for CCIVs being 1 July 2022, today ASIC released 7 regulatory guides relating to the registration and licensing requirements for CCIVs. We outline the key features of CCIVs in our previous update. INFO 272 provides much needed clarity on how both the CCIV itself and its initial sub-funds are to be registered.

Catagory:Global Regulatory Development