Financial Regulatory Forum

CFTC’s swap dealer rule for compliance chiefs: many questions in first “annual reports”

By Henry Engler, Compliance Complete

NEW YORK, Oct. 1, 2014 (Thomson Reuters Accelus) - New rules governing swap dealers and the requirements for dedicated chief compliance officers are now more than a year in effect, and a new review of the so-called “annual reports” that dealers must submit to the Commodities Futures Trading Commission suggest there are still lingering questions over the roles and responsibilities of CCOs, particularly for non-U.S. dealers.

The review, published by the law firm Wilmer Hale , found that as of May 31, 2014, 105 entities were provisionally registered as swap dealers, and therefore subject to the CFTC’s CCO rule, which came into force in December 2012. The study noted that of the total population, 53 were located in the United States, with the rest in other jurisdictions, including the European Union, Canada, Australia, Hong Kong, Japan, Mexico, Singapore, and Switzerland.  (more…)

Clearinghouses’ default “waterfall” offers no panacea against their potential failure

By Bora Yagiz, Compliance Complete

NEW YORK, Apr. 10, 2014 (Thomson Reuters Accelus) - The push of derivative contracts into central counterparties (CCP) – also known as clearinghouses — has been underway for more than five years, yet it remains unclear how these entities would fare under stressed market conditions in the U.S. (more…)

The JOBS Act at age two – prodigy or enfant terrible?

By Stuart Gittleman, Compliance Complete

NEW YORK, Apr. 3, 2014 (Thomson Reuters Accelus) - The financial services industry is still getting used to the two-year old JOBS Act, as funds gingerly begin to explore new general-solicitation freedoms and “crowdfunding” venues sort through the rules, speakers said at a Fordham Law School forum in New York.

As mandated by the JOBS – or Jumpstart Our Business Startups – Act enacted in April 2012, the Securities and Exchange Commission has adopted rules for general solicitations that became effective in September 2013, and is reviewing comments to a December 2013 set of proposed crowd-funding rules. (more…)

Book by high-profile author Lewis may spur high-frequency-trading reform push, success unclear

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, Apr. 2, 2014 (Thomson Reuters Accelus) - During a clip on Sunday night’s “60 Minutes” program, host Steve Kroft asked bestselling author Michael Lewis why he was so opposed to high frequency trading.

“If it wasn’t so complicated, it would be illegal,” said Lewis, who is the author of a new book called “Flash Boys: A Wall Street Revolt.”  (more…)

U.S. regulation risks a “Balkanization” of cross-border capital

By Henry Engler, Compliance Complete

NEW YORK, Mar. 12 (Thomson Reuters Accelus) - The term “unintended consequences” has often been used by critics of U.S. regulatory reform when characterizing its complexities. While well-intentioned individually, when unleashed in unison the multiple requirements banks that face become highly unpredictable, including across national borders. (more…)

“Big data” tools will improve regulatory oversight, FINRA’s di Florio says

By Stuart Gittleman, Compliance Complete

NEW YORK, Feb. 25 (Thomson Reuters Accelus) - The Financial Industry Regulatory Authority is developing a suite of “big data” information sources and analytics to improve regulatory oversight of securities firms, according to Carlo di Florio, FINRA’s chief risk officer and head of strategy.

Leveraging technology and analytics can make for a “unique moment in regulation [that lets regulators] see things they couldn’t have seen or understood as well before,” di Florio said at an event this week hosted by the Securities Industry and Financial Markets Association compliance and legal society. (more…)

SEC aims to loosen rules on foreign broker-dealers in U.S., official says

By Nick Paraskeva, for Compliance Complete

NEW YORK, Nov. 26 (Thomson Reuters Accelus) - U.S. securities regulators are looking to loosen rules for foreign-broker dealers acting in the U.S. on a cross-border basis. The change would come in the wake of new policy being adopted to implement derivatives cross-border rules under Dodd-Frank. The reform was outlined by John Ramsay, Acting Director, Division of Trading and Markets of the Securities and Exchange Commission (SEC).

Rulemaking priorities at the SEC division include the Volcker rule on proprietary trading, derivatives and a proposal for firms and exchanges to test major systems. New data sources and analytics will impact new rules on equity market structure and infrastructure improvements, Ramsay said on Tuesday at the Securities Industry and Financial Market Authority’s (SIFMA) Legal and Compliance Society. (more…)

Brokers face a fight asking the SEC to end exchanges’ SRO structure

By Nick Paraskeva, Compliance Complete contributing author

NEW YORK, Aug. 14 (Thomson Reuters Accelus) - Wall Street has asked regulators to consider ending the special supervisory status given to exchanges, saying that new technology such as dark pools and algorithmic trading has led to broker-dealers directly competing with exchanges for market share.

The exchanges have countered that market dispersion hurts investors, and are seeking regulatory protection from high frequency trading, and the Securities and Exchange Commission, which oversees both brokers and exchanges, is in the middle. (more…)

Financial industry anxious for clarity on swap-facility rules; business conduct a key compliance issue

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, June 11 (Thomson Reuters Accelus) - The financial industry is scrambling to understand the Commodity Futures Trading Commission’s final rules for firms trading derivatives on an electronic platform.

Representatives say several aspects of the rules adopted in May remain unclear, including which trades have to be traded electronically, how to adequately disclose risks in swaps, and the time frames for complying with the rules.  (more…)

CFTC rules on swaps trading put demands on compliance oversight

By Nick Paraskeva, for Compliance Complete

NEW YORK, May 29 (Thomson Reuters Accelus) - New U.S. rules requiring many over-the-counter derivatives to be traded on swap execution facilities and exchanges will have a major impact on the compliance and risk processes of market participants. Price quotation, execution and trade reporting requirements adopted last week by the Commodity Futures Trading Commission aim to bring transparency to the previously unregulated swaps markets.

The rules contain some concessions in response to industry lobbying against earlier proposals, but they did not squelch the opposition. (more…)

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