Financial Industry Regulatory Authority
FINRA Proposes Rules for "Limited Corporate Financing Brokers."
On February 26th, the Financial Industry Regulatory Authority ("FINRA") requested comment on proposed rules for firms that meet the definition of "limited corporate financing broker" ("LCFB"). A LCFB is a firm that engages in a limited range of activities, essentially advising companies and private equity funds on capital raising and corporate restructuring. The rule set would not apply to firms that carry or maintain customer accounts, handle customers' funds or securities, accept customers' trading orders, or engage in proprietary trading or market-making. Comments should be submitted on or before April 28, 2014. FINRA Regulatory Notice 14-09.
Privacy Protection Amendments Proposed.
On February 24th, the SEC provided notice of FINRA's filing of a proposed amendment to the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes to provide that any document that a party files with FINRA that contains an individual's Social Security number, taxpayer identification number, or financial account number must be redacted to include only the last four digits of any of these numbers. The proposed amendments would apply only to documents filed with FINRA. They would not apply to documents that parties exchange with each other, submit to the arbitrators at a hearing on the merits, or to cases administered under the Simplified Arbitration Rules. Comments should be submitted on or before March 21, 2014. SEC Release No. 34-71608.
Proposal for TRACE Reporting and Dissemination of Asset-Backed Securities Transactions Receives Accelerated Approval.
On February 24th, the SEC granted accelerated approval to FINRA's proposed revision of FINRA Rule 6750 to include Asset-Backed Securities among the TRACE-Eligible Securities that FINRA will disseminate publicly. In connection with this change, FINRA has proposed to revise certain existing definitions in its rules and add other, new definitions in order to delineate the specific Asset-Backed Securities that would be subject to dissemination pursuant to Rule 6750. Comments should be submitted on or before March 21, 2014. SEC Release No. 34-71607.
Municipal Securities Rulemaking Board
New Registration Procedures Approved.
On February 26th, the SEC approved the Municipal Securities Rulemaking Board's ("MSRB") proposed amendments to Rule A-12 to create new registration procedures for MSRB-regulated brokers, dealers and municipal securities dealers, and municipal advisors, which procedures would be incorporated into a new Form A-12. The proposed rule changes would consolidate the MSRB registration process in Rule A-12 and delete the rule language under Rules A-14, A-15, and G-40, eliminate Forms RTRS and G-40, and amend Rule G-14(b)(iv). In addition to consolidating the MSRB registration process, the rule change includes new changes to the existing registration process. For example, the rule change requires registrants to provide contact information for several new contact persons on Form A-12. It also provides a waiver of the annual fee for dealers and municipal advisors that register in the last month of MSRB's fiscal year. SEC Release No. 34-71616.
New Liquid Asset Requirements Approved.
On February 27th, the SEC approved the New York Stock Exchange's proposed amendment of NYSE Rule 103.20, which sets forth net liquid assets requirements for member organizations that operate as Designated Market Maker units. The amendments change the types of financial assets and resources that would be allowed to fulfill the net liquid assets requirement. SEC Release No. 34-71620.
Amendments to Option Order Rules Approved.
On February 27th, the SEC approved NYSE Arca's and NYSE MKT's individually submitted proposals amending their respective rules to clarify the applicability and functionality of certain option order types. Those order types are "Market Orders," "Stop Orders and Stop Limit Orders," and "NOW Orders."
Disapproval Proceedings Instituted for Proposed Institutional Liquidity Program Pilot.
On February 25th, the SEC instituted disapproval proceedings regarding the New York Stock Exchange's and NYSE Arca's individually submitted proposals to establish, for a pilot term of one year, an Institutional Liquidity Program (the "Program"). To do so, the Program would introduce two new order types to facilitate interactions between market participants with block-size trading interest and liquidity providers that submit orders that meet certain size thresholds. The Exchanges have characterized the Program as a "targeted size discovery mechanism" that would enable market participants to execute trades that are larger than the average size of trades executed on the Exchanges or in most dark pools. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of March 3. Rebuttal comments should be submitted 35 days after publication. SEC Release No. 34-71609.
On February 25th, NYSE Regulation reminded floor brokers that block-sized agency crosses under Rule 72(d) can only be effectuated when in possession of an order to buy and an order to sell an equivalent amount of the same security, and both orders are for 10,000 shares or a quantity of stock having a market value of $200,000 or more, whichever is less. Floor brokers may not aggregate orders to meet the Rule's minimum share or dollar value requirement. NYSE Information Memo 14-6.
Fee Rate Advisory.
On February 25th, NYSE Euronext reminded member firms that the SEC announced an adjustment to certain fees charged to registered broker-dealers and other market participants pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934. The changes take effect on March 18, 2014. NYSE Information Memo 14-5.
Disapproval Proceedings Instituted for Proposed ETF.
On February 24th, the SEC instituted proceedings to determine whether to approve or disapprove NYSE Arca's proposal regarding the use of derivative instruments by the PIMCO Total Return Exchange Traded Fund. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of March 3. Rebuttal comments should be filed 35 days after publication. SEC Release No. 34-71606.