DLA Piper March 23, 2017

United States

G20 not worried about financial regulation rollback. In response to growing concerns around US deregulation talk, Germany finance minister Wolfgang Schaeuble stated that finance leaders of the world's top economies are not worried about the impending rollback of financial market regulation. (3/17/2017) Reuters.

Bonuses on Wall Street could show their first uptick since 2009. Reuters reported that Wall Street bonuses could rise as much as 15% in 2017. According to compensation firm Johnson Associates Inc., this boost would be the first significant uptick since 2009. The firm said in a presentation to an industry group that an increase in market volatility and the promise of looser regulation since President Trump's election may increase trading profits. (3/17/2017)

Trump's nominee for CFTC chairman position unveils major overhaul. Acting CFTC Chairman J. Christopher Giancarlo, who President Trump has just nominated as permanent chairman, delivered a comprehensive policy speech at the Futures Industry Association’s annual conference in Boca Raton, Florida, in which he laid out plans for a widespread overhaul of the agency that will include everything from cutting regulation to restructuring the unit that conducts surveillance for market abuses. According to CNBC, Giancarlo also vowed to fix what he referred to as "flawed swaps trading rules," which he said are responsible for driving business away from the US. (3/15/2017)

Canada

Canadian securities regulators provide guidance for disclosure improvements following a review of investment entities. The securities regulatory authorities in Ontario, Alberta, and Saskatchewan announced the release of CSA Multilateral Staff Notice 51-349 Report on the Review of Investment Entities and Guide for Disclosure Improvements, which summarizes key findings from an Ontario Securities Commission staff review of the continuous disclosure of reporting issuers that meet the definition of investment entity under IFRS 10 Consolidated Financial Statements. (3/16/2017)

Canadian securities regulators highlight need for improved social media disclosure practices by reporting issuers. The CSA announced its release of CSA Staff Notice 51-348 Staff’s Review of Social Media Used by Reporting Issuers, which summarizes staff's findings and disclosure expectations for reporting issuers that use social media. (3/9/2017)

OSC highlights potential securities law requirements for businesses using distributed ledger technologies. The OSC announced that is advising businesses that use distributed ledger technologies, such as blockchain, as part of their financial products or service offerings that they may be subject to Ontario securities law requirements. (3/8/2017)

Final Rules

SEC adopts revised EDGAR Filer manual. The SEC issued a final rule that approves revisions to the EDGAR Filer Manual and related rules to reflect updates to the EDGAR system, which include, among other things, the new online version of Transfer Agent submission form types, the US GAAP 2017 Taxonomy, and the ability for filers to submit duplicate filings for submission form type 10-D. The final rule became effective on March 9, 2017. (3/13/2017) SEC final rule.

Guidance

FAQs on Form 13F. The Division of Investment Management updated its Frequently Asked Questions to assist money managers who are required to file Form 13F. (3/15/2017)

Guidance Update for holding companies and the application of Investment Company Act Rule 3a-2. The Division of Investment Management issued a Guidance Update that clarifies the application of Investment Company Act Rule 3a-2 as to holding companies that are involved in various operating businesses through wholly-owned and majority-owned subsidiaries, where neither the holding companies nor their subsidiaries are regulated as investment companies.

Information Update for advisers who rely on Unibanco no-action letters. The Division of Investment Management issued an Information Update regarding the representations and undertakings required by the Unibanco letters including what information, if any, should be submitted to the staff or SEC to facilitate the agency's ability to monitor and enforce certain advisers’ performance of their obligations to their US clients.

Information Update: letters to support tax claims in foreign jurisdictions. The Division of Investment Management has published an Information Update to provide US-registered funds with a framework for making requests for letters from the Division of Investment Management to support tax claims in foreign jurisdictions.

No-Action Relief and Exemptive Orders

Global investment managers or sponsors can offer investment products across foreign jurisdictions utilizing a master-feeder arrangement. The Division of Investment Management issued a no-action letter stating that it would not recommend enforcement action under Section 12(d)(1)(A) or (B) of the Investment Company Act of 1940 against a foreign feeder fund that acquires securities of a US master fund in excess of the limits in Section 12(d)(1)(A), or against the US master fund, master fund principal underwriter and any broker or dealer, that sells the US master fund’s securities to the foreign feeder fund in excess of the limits in Section 12(d)(1)(B), as long as it does so in compliance with the conditions of Section 12(d)(1)(E). (3/8/2017)

Offerors exempt from Exchange Act in connection with offer to purchase shares of Argentinian corporation. PCT LLC, Grupo Inversor Petroquimica S.L. and WST S.A. (the offerors) requested exemptive relief from provisions of Exchange Act Section 14(d)(6) and Rules 14d-8 and 14d-10(a)(2) thereunder in connection with their offer to acquire, for cash, up to 194,651,345 outstanding Class B shares of common stock, including those represented by American depositary shares, which represent 24.5% of the capital stock of Transportadora de Gas del Sur S.A., a corporation organized under the laws of Argentina, through concurrent tender offers in the US and Argentina. The Division of Corporation Finance granted the exemption, provided the offerors comply with the distribution and proration rules of Article 70 of the Argentine securities commission. (3/6/2017)

Speeches and Statements

Stein sees potential benefits of Investor Advocate's research initiative for the modern investor. SEC Commissioner Kara M. Stein delivered remarks at the SEC Office of the Investor Advocate’s Evidence Summit in which she discussed how the summit’s objective of investigating the behavior and beliefs of investors using data and analysis could help regulators and market participants find ways to leverage technology "to benefit and empower the modern American investor." (3/10/2017) Stein remarks.

Other Developments

Shortened settlement cycle on SEC's agenda at Open Meeting. The SEC will hold an Open Meeting on March 22, 2017, to vote on final amendments to Securities Exchange Act Rule 15c6-1 that would shorten the standard settlement cycle for most broker-dealer transactions to two business days after the trade date. SEC meeting notice.

Equity Market Structure Advisory Committee meeting. The SEC’s Equity Market Structure Advisory Committee will hold a public meeting on April 5, 2017, to consider recommendations and updates from its four subcommittees. Written statements are due on or before March 29, 2017. SEC commission notice.

Updated money market fund statistics. The SEC's Division of Investment Management released updated money market fund statistics, which include data as of February 28, 2017. (3/16/2017) Money market fund statistics.

SEC and Belgian regulator sign enhanced MOU to supervise Euroclear's expanded clearing services. The SEC and the National Bank of Belgium have amended their memorandum of understanding to provide for additional cooperation and the exchange of information to enhance their oversight of Euroclear Bank’s expanded clearing services, which now include limited clearing agency services for US equity securities. (3/14/2017) SEC press release.

Updated information for EDGAR filers. The SEC published the EDGAR Filer Manual (Volume II) EDGAR Filing (Version 41), the EDGAR Filer Manual (Volume I) General Information (Version 27), the EDGAR Form N-MFP2 XML Technical Specification (Version 2.0), the EDGAR Form TA XML Technical Specification (Version 1.0), and the EDGAR X-17A-5 XML Technical Specification (Version 3.0). (3/13/2017)

DERA white paper examines Limit Up-Limit Down Plan. Staff in the SEC's Division of Economic and Risk Analysis published a white paper that analyzes the frequency with which certain types of market events occurred both before and after the implementation of the Limit Up-Limit Down National Market System Plan. (3/10/2017) DERA white paper.

Investor Advisory Committee meeting. At the SEC's Investor Advisory Committee meeting, Acting SEC Chair Michael S. Piwowar updated the Committee about recent rulemaking initiatives designed to improve the disclosures and information available to investors as well as the investor research initiative launched by the SEC's Office of the Investor Advocate. SEC Commissioner Kara M. Stein raised concerns about unequal voting rights and their potential long-term effects on investors, capital formation, and emerging companies. (3/9/2017)

SEC updates EDGAR to support new XBRL taxonomies. The SEC upgraded its EDGAR system to support several new eXtensible Business Reporting Language taxonomies, including the 2017 US GAAP, 2017 COUNTRY, 2017 CURRENCY, 2017 EXCH, and 2017 NAICS taxonomies. The SEC recommended that filers transition to the 2017 taxonomies for the earliest reporting period that ends after March 6, 2017, but not for reporting periods that end before March 6, 2017. (3/8/2017) SEC press release.

Comment period extended on proposed capital requirements of swap dealers and major swap participants. The CFTC announced that it is extending the comment period on its proposed capital requirements applicable to swap dealers and major swap participants for an additional 60 days. The original comment period was to expire on March 16, 2017. As extended, the comment period will expire on May 15, 2017. Notice of the extension will be published in the Federal Register. (3/13/2017)

Conditional extension of no-action relief issued regarding masking of certain identifying information required to be reported. The DMO announced its issuance of a letter providing a conditional extension of the relief provided in CFTC Letters 16-03 and 16-33 regarding masking of certain identifying information required to be reported. The extension is valid through September 1, 2017, for certain French and Swiss swaps. For all other swaps, the extension is valid with respect to each reporting counterparty for as long as the reporting counterparty reasonably believes that reporting the relevant identifying information would violate applicable foreign laws. (3/10/2017)

OCC

OCC issues draft licensing manual supplement for evaluating charter applications from financial technology companies. The OCC provided additional detail on evaluating national bank charter applications from financial technology (fintech) companies that engage in the business of banking. The detail came in a draft supplement to the agency's existing Licensing Manual. This supplement explains how the OCC will apply the licensing standards and requirements in existing regulations and policies to fintech companies applying for special purpose national bank charters. The supplement also describes unique factors that the agency will consider in evaluating applications from fintech companies; expectations for promoting fair access, fair treatment, and financial inclusion; and the agency’s approach to supervising those fintech companies that become national banks. Comments are due to the OCC by the end of April 14, 2017. (3/15/2017)

Comptroller Curry discusses the federal banking system's condition. Comptroller of the Currency Thomas J. Curry discussed the condition of the federal banking system during remarks at Central Connecticut State University. The speech came as part of the Distinguished Banking and Finance Lecture Series at the university. (3/9/2017)

CFPB

Requests for comment on plan for assessing remittance rule. The CFPB announced the release of its plan to assess the effectiveness of the remittance rule. The agency asked the public to comment on the plan, suggest sources of data, and generally to provide information that would help with the assessment. Comments on the plan will be due 60 days after its publication in the Federal Register. (3/17/2017)

CFPB proposes to extend the effective date for its prepaid accounts rule. The CFPB released a proposal to delay the effective date of its rule governing prepaid accounts by six months from the current October 1, 2017 effective date. Comments on the proposal will be due 21 days after it is published in the Federal Register. (3/9/2017)

FINRA to conduct second workshop on TRACE reporting of transactions in US Treasuries. The Financial Industry Regulatory Authority will host its second phone-in workshop on the reporting of transactions in US Treasury Securities to the Trade Reporting and Compliance Engine on April 6, 2017. Registration for the workshop should be completed on or before April 5, 2017. FINRA press release.

FINRA alerts investors to dangers of binary options follow-up schemes. In an Investor Alert, FINRA warned anyone involved in binary options trading through unregistered non-US companies of the dangers of follow-up frauds, which promise to help investors recoup binary trading losses through recovery scams and IRS impersonation scams. (3/16/2017) FINRA press release.

SEC rejects proposal for first bitcoin exchange-traded fund. Citing concerns about the lack of regulation in bitcoin markets, the SEC disapproved a proposed rule change submitted by Bats BZX Exchange that would have allowed BZX to list and trade shares of the Winklevoss Bitcoin Trust. (3/10/2017) SEC Release No. 34-80206.

Joint guidance by FINRA, exchanges on CAT Plan's clock synchronization requirements. FINRA and the national securities exchanges published joint guidance on the NMS Plan Governing the Consolidated Audit Trail in an effort to clarify upcoming deadlines for compliance with the clock synchronization and certification requirements that apply to certain firms. (3/9/2107) FINRA regulatory notice. See also a related Information Memo published by the New York Stock Exchange LLC. (3/8/2017)

FINRA will conduct special election to fill Large Firm Governor vacancy. FINRA will hold a special meeting of large member firms to elect one individual to fill a vacant Large Firm Governor seat on the FINRA Board of Governors. Eligible individuals who have not been nominated for the seat by the Nominating Committee may submit a petition on or before April 24, 2017, to be added to the ballot. (3/9/2017) FINRA election notice.

Japan

Japan and Singapore establish FinTech Cooperation Framework. The FSA and the MAS jointly announced the establishment of a Co-operation Framework to enhance FinTech linkages between both countries. (3/13/2017)

Financial regulators of Japan and UK announce exchange of letters on co-operation framework to support innovative FinTech companies. The Financial Services Agency of Japan (JFSA) and the UK’s Financial Conduct Authority announced that they have exchanged letters on a co-operation framework to support innovative FinTech companies. This exchange of letters will provide a regulatory referral system for Innovator Businesses from Japan and the UK seeking to enter the other's market and will encourage the regulators to share information about financial services innovation in their respective markets, reduce barriers to entry in a new jurisdiction, and further encourage innovation in both countries. (3/9/2017)

Hong Kong

SFC concludes consultation on position limit regime. The SFC announced its publication of conclusions to a consultation to expand the scope of the position limit regime. After considering market feedback, the SFC concluded that the proposals as set out in the consultation will be implemented. These include a 300 percent cap on the excess position limit that may be authorized by the SFC, a statutory position limit of 150,000 contracts for stock options as well as new excess position limits for index arbitrage activities, asset managers and market makers of exchange-traded funds. (3/21/2017)

Statement on recent GEM listing applicants. The SFC announced that it has issued a guideline to sponsors, underwriters and placing agents involved in the listing and placing of GEM stocks, and a joint statement with The Stock Exchange of Hong Kong Limited regarding the price volatility of GEM stocks. (3/13/2017)

Implementation of expanded short position reporting. The SFC reminded market participants that, effective March 15, 2017, reporting will be required for reportable short positions in all designated securities eligible for short selling specified by The Stock Exchange of Hong Kong Limited. This follows the completion of a two-month pilot test of the Short Position Reporting Service. (3/9/2017)

Singapore

SGX told to enhance recovery processes following trading disruption last year. The MAS announced that it has directed SGX to implement measures to enhance its recovery processes and operational resilience, following supervisory investigation into the trading disruption to the securities market in July 2016. These measures include recommendations by the Industry Working Group (IWG), comprising SGX and industry stakeholders. SGX will contribute US$1.5 million to co-fund the costs that may be incurred by brokerage firms to implement the IWG measures. (3/20/2017)

MAS seeks public feedback on proposed new legal tender limit for coins. The MAS announced that it has published a consultation paper to seek public feedback on the proposed new legal tender limit of 10 coins per denomination across all denominations in a single transaction. This would mean that a payer could use up to 10 pieces each of five-cent, 10-cent, 20-cent, 50-cent and one-dollar coins per transaction. Comments on the CP must be submitted by April 6, 2017. (3/16/2017)

MAS cautions investors on risks in trading binary options with unregulated platforms. The MAS issued a warning to investors on the trading of binary options with unregulated platforms. This comes in the wake of an increase in the number of complaints from investors who have suffered financial losses from such investments. (3/14/2017)

MAS working with industry to apply distributed ledger technology in securities settlement and cross border payments. The MAS announced the conclusion of the proof-of-concept project to conduct domestic inter-bank payments using distributed ledger technology. (3/9/2017)

MAS and Abu Dhabi Global Market collaborate to foster FinTech innovation and cross-border activities. The MAS announced that it and Abu Dhabi Global Market signed a Cooperation Agreement to foster closer cooperation on developments and initiatives that nurture FinTech entrepreneurship and support innovation in financial services in both Singapore and Abu Dhabi. (3/8/2017)

Australia

Australia Evaluating distributed ledger technology. ASIC announced its release of Evaluating distributed ledger technology, an information sheet on distributed ledger technology or blockchain. (3/20/2017)

ASIC reports on how large financial advice firms have dealt with poor advisers. ASIC announced that it has released the findings of its review of how Australia’s largest financial advice firms have dealt with past poor advice and non-compliant advisers, including how these firms have dealt with affected customers. (3/17/2017)

ASIC consults on expiring class order about licensing relief for trustees of wholesale equity schemes. ASIC announced that it has released a consultation paper proposing to either remake or repeal ASIC Class Order [CO 07/74] Wholesale equity schemes: Licensing relief for trustees, which is due to expire on October 1, 2017. Consultation Paper 280 ASIC class order on wholesale equity schemes: Licensing relief for trustees – [CO 07/74] outlines ASIC’s rationale for proposing to either remake [CO 07/74] with changes or repeal it if it no longer forms a useful part of the legislative framework. Comments on CP 280 are due by April 13, 2017. (3/15/2017)

ASIC releases new instrument for differential fees. Following public consultation, ASIC announced that it has released a new legislative instrument regarding differential fees, replacing the class order due to expire on April 1, 2017. (3/10/2017)

ASIC and ASBFEO join forces to ensure bank lenders meet unfair contract laws. ASIC announced that a joint review of small business standard form contracts undertaken by it and the Australian Small Business and Family Enterprise Ombudsman has revealed that Australian lenders, including the country’s big four banks, have substantial work to do to eliminate unfair terms from their loan agreements. (3/9/2017)

European Union

ESMA sees relatively ample liquidity in sovereign bond markets. ESMA announced that its latest research piece on market liquidity published in its recent report on trends, risks and vulnerabilities found improved liquidity in European sovereign bonds markets. (3/21/2017)

ESAs welcome EC's public consultation on their operation. The European Supervisory Authorities (EBA, EIOPA and ESMA) welcomed the European Commission's public consultation to seek views on possible changes to their current framework of operation. (3/21/2017)

ESMA sees high market and valuation risk amid substantial political and policy uncertainty. ESMA announced that its latest report on Trends, Risks and Vulnerabilities No. 1, 2017 identifies political and policy uncertainty, such as potential repercussions from the upcoming elections in some EU Member States, as the main risk drivers for 2017. (3/20/2017)

ESMA to cooperate with non-EU regulators on CCPs. ESMA announced that it has established five MoUs under the European Markets Infrastructure Regulation (EMIR). The MoUs establish cooperation arrangements, including the exchange of information, regarding Central Counterparties, which are established and authorized or recognized in Brazil, Japan, India, the Dubai International Financial Center, or the United Arab Emirates, and which have applied for EU recognition under EMIR. (3/20/2017)

EBA updates list of OSIIs in the EU. The EBA announced that it has updated the 2016 list of Other Systemically Important Institutions (O-SIIs) in the EU. O-SIIs, those institutions which, along with Global Systemically Important Institutions, are deemed systemically important, have been identified by the relevant authorities across the EU according to harmonized criteria provided by the EBA Guidelines. This list also reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs. (3/15/2017)

EBA issues Opinion on measures to address macroprudential risk. The EBA announced that it has published an Opinion following the notification by the National Bank of Belgium of its intention to modify capital requirements in order to address an increase in macroprudential risk. (3/15/2017)

ESMA publishes first set of CSDR Q&As. ESMA announced that it has published its first set of Q&As on the central securities depositories requirements, with a focus on CSD requirements provisions, which enter into force on March 30, 2017, and will trigger the CSD authorization process. (3/13/2017)

EBA issues revised list of ITS validation rules. The EBA announced that it has issued a revised list of validation rules in its Implementing Technical Standards on supervisory reporting, highlighting those that have been deactivated either for incorrectness or for triggering IT problems. (3/10/2017)

EBA calls for improvements to decision-making framework for supervisory reporting requirements. The EBA announced that it has issued an Opinion to the European Parliament, Council and Commission proposing that the decision-making framework for adopting supervisory reporting requirements be made more efficient and fit-for-purpose by replacing the Commission's Implementing Technical Standards with decisions adopted directly by the EBA. (3/8/2017)

EBA publishes final guidelines on LCR disclosure. The EBA announced that it has published its final Guidelines on liquidity coverage ratio (LCR) disclosure. These Guidelines provide harmonized disclosure templates and tables for LCR disclosure and aim at improving transparency and comparability of LCR and other liquidity risk management related information.(3/8/2017)

United Kingdom

UK to initiate formal Brexit proceedings on March 29. The Wall Street Journal reported that UK Prime Minister Theresa May will formally trigger Brexit negotiations on March 29, 2017, by notifying the European Union of Britain’s intent to leave the bloc. (3/20/2017)

PRA responds to recommendations on its approach to its insurance objective. The Prudential Regulation Authority issued a response to the Independent Evaluation Office's evaluation of the PRA's approach to its insurance objective, which recommended that the PRA improve how it articulates its strategy and approach to its policyholder protection responsibilities. The PRA indicated that it will review how it interprets, implements and communicates the insurance objective as well as its processes for interacting with the UK Financial Conduct Authority. (3/20/2017) PRA response.

BOE's Fintech Accelerator announces new community and proofs of concept. The Bank of England announced that its Fintech Accelerator has started a new community of fintech-related organizations in an effort to increase the BOE's engagement with fintech firms across the sector and to share developments and trends. The BOE also announced the two firms selected to participate in its latest proofs of concept. (3/17/2017) BOE press release.

FCA consults on guidance for treatment of PEPs by financial firms under anti-money laundering regulations. The FCA requested comments on proposed guidance on anti-money laundering obligations for financial services firms that would clarify who should be considered a politically-exposed person, a family member of a PEP or known close associates, and the steps that firms should take when dealing with higher or lower risk PEPs. Comments are due on or before April 18, 2017. (3/16/2017) FCA press release.

Regulation round-up. The FCA published the March 2017 edition of its Regulation round-up. (3/16/2017)

FCA proposes changes to redress calculation methodology for unsuitable defined benefit pension transfers. The FCA launched a guidance consultation on proposed changes to the current methodology used to calculate levels of redress due in cases of unsuitable advice on transfers from defined benefit pension schemes to personal pensions. Comments are due on or before June 10, 2017. (3/10/2017) FCA press release.

FSB Chair outlines FSB’s priorities in G20 letter. In a letter to the G20 Finance Ministers and Central Bank Governors, Financial Stability Board Chair Mark Carney emphasized the need to complete the implementation of post-crisis reforms and outlined the FSB's priorities under the G20 German Presidency, which include the transformation of shadow banking into resilient market-based finance, the application of post-crisis reforms to the over-the-counter derivatives market, the support of post-crisis reform implementation, and the development of measures to address new and emerging vulnerabilities. (3/17/2017) FSB press release.

Basel Committee consults on framework for identification and management of step-in risk. The Basel Committee on Banking Supervision published a second consultative document that proposes guidelines for the identification and management of step-in risk in banks’ relationships with unconsolidated entities that could affect a bank's capital and liquidity positions. Comments on the proposed guidelines are due on or before May 15, 2017. (3/15/2017) BIS press release.

IOSCO announces Asia Pacific capacity building hub. The International Organization of Securities Commissions announced the launch of a regional capacity building hub in Malaysia, which will offer training programs and other activities designed to increase regulatory capacity in the Asia Pacific region's developing and emerging markets. (3/14/2017) IOSCO press release.

FSB consults on proposals for UTI governance arrangements. The FSB requested comments on a consultation document that contains proposals for the governance arrangements for a global unique transaction identifier for use in facilitating the consistent aggregation of OTC derivatives transactions. Comments are due on or before May 5, 2017. (3/13/2017) FSB press release.