Rules

Two New Swaps Rules Adopted and a Third is Proposed

On January 14th, the SEC adopted new rules that require security-based swap data repositories (“SDRs”) to register with the SEC and prescribe reporting and public dissemination requirements for security-based swap transaction data. New Regulation SDR requires SDRs to register with the SEC and sets forth other requirements with which SDRs must comply. The rule also provides an exemption from registration for certain non-U.S. SDRs when specific conditions are met. New Regulation SBSR outlines the information that must be reported and publicly disseminated for each security-based swap transaction. Regulation SBSR also assigns reporting duties for many security-based swap transactions and requires SDRs registered with the SEC to establish and maintain policies and procedures for carrying out their duties. Under the rules, the Commission is recognizing the Global Legal Entity Identifier System as the system from which security-based swap counterparties must obtain codes to identify themselves when reporting security-based swap data. The rules also address the application of Regulation SBSR to cross-border security-based swap activity and include provisions to permit market participants to satisfy their obligations under Regulation SBSR through compliance with the comparable regulation of a foreign jurisdiction. The Commission also voted to publish for comment proposed new rules, rule amendments, and guidance related to the reporting and public dissemination of security-based swap transaction data. The proposed rules would assign reporting duties for certain security-based swaps not addressed by Regulation SDR, prohibit registered SDRs from charging fees to or imposing usage restrictions on the users of publicly disseminated security-based swap transaction data, and provide a compliance schedule for certain provisions of Regulation SBSR SEC Press Release.

Other Developments

Fee Rate Advisory

On January 15th, the SEC announced that starting February 14, 2015, the fee rates applicable to most securities transactions will be set at $18.40 per million dollars. The assessment on security futures transactions will remain unchanged at $0.0042 for each round turn transaction. Fee Rate Advisory.

Examination  Priorities

On January 13th, the SEC announced the Office of Compliance Inspections and Examinations’ priorities for 2015. OCIE will assess risks to retail investors that can arise from the offering of private funds, illiquid investments, and structured products. Additionally, OCIE will monitor how financial services firms are providing information, advice, products, and services to help retail investors plan for and live in retirement. With respect to market-wide risks, OCIE will examine for structural risks and trends that involve multiple firms or entire industries, including: monitoring large broker-dealers and asset managers in coordination with the SEC’s policy divisions, conducting annual examinations of clearing agencies as required by the Dodd-Frank Act, assessing cybersecurity controls across a range of industry participants, and examining broker-dealers’ compliance with best execution duties in routing equity order flow. OCIE will use its data analytic enhancements to focus on registrants and registered representatives that appear to be potentially engaged in illegal activity. SEC Press Release. As part of OCIE’s exam priorities, the Office of Market Oversight advised national securities exchanges that it is preparing to conduct examinations of them. In a separate letter, Market Oversight listed priorities which include those exchanges which have been the subject of enforcement proceedings since 2012; internal controls; and the monitoring and enforcement of listing rules.

Market Structure Advisory Committee

On January 13th, the SEC announced the members of the new Equity Market Structure Advisory Committee. SEC Press Release.

Financial Reporting Manual Updated

On January 12th, the Division of Corporation Finance updated the Financial Reporting Manual in light of the Financial Accounting Standards Board’s (“FASB”) issuance of Accounting Standards Update No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting, a consensus of the FASB Emerging Issues Task Force and rescission of SAB Topic 5.J. See Summary.

Dark Pools

On January 12th, Bloomberg reported the SEC is considering new rules for private trading exchanges known as “dark pools.” The proposals would address order types, pricing data, and order routing. Dark Pools.

Transfer Agents

On January 12th, Reuters discussed the SEC’s plans to revamp the rules governing transfer agents. Transfer Agents.