The Financial Report, Vol. 6, No. 17

18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 1/13 Volume 6, No. 17 • September 15, 2017 IN THIS ISSUE • Discussion and Analysis • News from the Americas • US Securities and Exchange Commission Developments • US Commodity Futures Trading Commission Developments • US Banking Developments • US Exchanges and Self-Regulatory Organizations • News from Asia and the Pacific • News from Europe • Global Regulators Discussion and Analysis The juxtaposition of items in the financial news is always fascinating. Earlier this week, an article appearing in the Wall Street Journal stated that state legislatures are moving to bolster investor protections due to concerns that the current federal administration will weaken the fiduciary rule. DLA Piper partner John Grady, who also leads the Alternative and Direct Investment Securities Association, was quoted in the article. He said that “the states . . . are picking up the pieces . . . . People feel there’s a vacuum they have to fill.” Unfortunately, however, potentially inconsistent regulation at the state level likely would increase compliance costs considerably more than a single federal rule applicable to both retirement and nonretirement accounts. The second page of that same issue of the WSJ contained another article reporting that “American households are enjoying the strongest sustained income growth this century after a long stretch of stagnation marked by financial crisis, recession and slow recovery.” This article reports that median household income last year was $59,039, a new high, surpassing the previous peak reached in 1999. The survey indicated that an annual income of $170,536 put a family in the top 10 percent of American households. Although not surprising, that income level is still well below the threshold generally required for “accredited investor” status. So, how do we reconcile these stories? The answer to that question probably can be found by analyzing the true agenda or constituency being served. State elected officials presumably garner votes by championing greater investor protection. Retail investors for the most part are not trading their own accounts. Rather, they are primarily accessing the markets through professionally managed retirement plans or funds. This also, in part, explains the substantial movement of assets to index-based and other passive investment strategies and the proliferation of automated or robo-adviser trading systems. The regulation of the financial markets is complicated enough. It is imperative to understand the meaning behind the numbers to best understand the applicable regulation. Back to top News from the Americas United States Rules controlling financial abuse have a negative impact on emerging markets. The Financial Times reported that regulations that were put in place over the past few years to fortify the global financial system against financial abuse are having unintended consequences for emerging market countries. According to a survey of more than 300 of the International Finance Corporation’s emerging market banking clients in 92 countries, increased capital and liquidity standards, rising CONTACTS Co-Editors-in-Chief, Financial Report Edward Johnsen Wesley Nissen Issue Editors Edward Johnsen Wesley Nissen 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 2/13 compliance costs, and imminent massive regulatory fines have led many global banks to reassess their emerging market cross-border banking systems. (9/7/2017) Canada Location change for Roundtable on the Option of Discontinuing Embedded Commissions. The OSC announced a location change for the roundtable on the Option of Discontinuing Embedded Commissions. It will now take place on September 18, 2017, from 12:30 p.m. to 4:30 p.m. at The Globe and Mail Centre, 17th Floor, 351 King Street East, Toronto. The roundtable will focus on options put forward by industry for consideration during the recent written consultation, to discuss whether they address the investor issues created by embedded commissions. (9/8/2017) OSC announces speakers for Dialogue 2017. The OSC announced the agenda and speakers’ lineup for Dialogue 2017, the OSC’s annual conference. OSC Dialogue 2017 will focus on the benefits and challenges of embracing change amid disruption in the financial services industry. Panels will explore the impact of emerging technologies, data analytics in enforcement, long-term trends in corporate governance, and the evolving investor experience. (9/7/2017) Roundtable to discuss review of women on boards and in executive officer positions. The OSC announced that it will hold a roundtable to discuss the findings of its third annual review of disclosures made under the upcoming National Instrument 58-101 Disclosure of Corporate Governance Practices relating to women on boards and in executive officer positions. The roundtable will take place on October 24, 2017, from 9am to 11am on the 22nd floor of the OSC’s offices, located at 20 Queen Street West in Toronto, Ontario. (9/6/2017) Canadian securities regulators outline securities law requirements that may apply to cryptocurrency offerings. The Canadian Securities Administrators announced that they have issued CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings, initial token offerings, cryptocurrency investment funds and the cryptocurrency exchanges trading these products. (8/24/2017) Back to top US Securities and Exchange Commission Developments Guidance Updates to Financial Reporting Manual. The Division of Corporation Finance updated its Financial Reporting Manual to describe communications with its Office of Chief Accountant (CF-OCA) and provide contact information; clarify that questions about applying the guidance on abbreviated financial statements to a predecessor entity should be directed to CF-OCA; and clarify the guidance on the omission of financial information from draft and filed registration statements. (8/25/2017) No-Action Relief and Exemptive Orders Division will not recommend enforcement if Black Creek repurchases shares under New Redemption Program. The Division of Corporation Finance’s Office of Mergers & Acquisitions determined that it will not recommend enforcement action under Rule 13e-4 if Black Creek Diversified Property Fund Inc. repurchases shares from its stockholders under a “New Redemption Program,” which Black Creek noted will provide stockholders with liquidity with respect to their investments in the company’s shares. DLA Piper was counsel to Black Creek on this matter. (9/1/2017) DCF grants exemptive relief from Exchange Act Rule 14e-5. The Division of Corporation Finance granted an exemption from Exchange Act Rule 14e-5 to First Trust Exchange-Traded Fund III, which is registered as an open-end management WE ARE ALSO THINKING ABOUT Our latest issue of Israel Group News Our Guide to Going Global Series Our Securities and Corporate Finance Alert: “Canadian Securities Administrators provide new guidance on cryptocurrency offerings and approve exemptive relief for Canadian ICO” Our Corporate Governance Alert: “A to-do list for the fourth quarter – three key topics for public companies, plus action items” ABOUT US DLA Piper’s Financial Services team represents a broad spectrum of institutions involved in virtually every aspect of finance and financial services, including banks, broker-dealers and investment advisers in connection with transactional, regulatory compliance, structured products, private funds, derivatives, futures and securities trading, securitizations, corporate lending, and SEC and other regulatory investigation, enforcement and litigation matters. Our Corporate and Securities group represents clients ranging from Fortune 500 companies to startup entities developing industry-leading technologies, including banks, finance companies, venture capital and private equity funds, insurance companies, pension funds and institutional lenders, with respect to sophisticated transactions, corporate governance and tax matters, and compensation and technology issues. DLA Piper is a global law firm with lawyers in the Americas, Asia Pacific, Europe, Africa and the Middle East, positioning us to help companies with their legal needs around the world. Find out more at www.dlapiper.com. SUBSCRIBE Would you like to receive other DLA Piper publications? Please visit this page to sign up. 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 3/13 investment company. (8/23/2017) Selected Enforcement Actions Investment adviser settles charges of disclosure and compliance failures over share class selection. The SEC instituted settled administrative proceedings against an investment adviser for breaches of fiduciary duty, inadequate disclosures, and compliance deficiencies. The SEC alleged that the adviser, which served as an adviser to smaller non-profit organizations that sponsored employee retirement plans as well as individual retirement account holders, recommended Class A mutual fund shares that charged 12b-1 fees when less expensive institutional share classes of the same mutual funds were available. The 12b-1 fees paid by the mutual funds held by plan participants and IRA holders went to the adviser’s affiliated broker-dealer. The adviser allegedly failed to disclose to its advisory clients the conflict of interest presented by its recommendations to purchase Class A mutual fund shares, failed to adopt compliance policies governing mutual fund share class selection, and failed to implement its compliance policy regarding conflicts of interest. Without admitting or denying the allegations, the adviser settled the charges by consenting to the entry of cease-and-desist and censure orders and agreeing to pay nearly US$52,000 in disgorgement, interest, and penalties. (9/8/2017) In the Matter of Envoy Advisory, Inc., SEC Release No. IA-4764. Speeches and Statements SEC statement on the implementation of the T-2 settlement cycle. The SEC issued a statement to mark the implementation of the two business day standard settlement cycle for most securities transactions, which became effective on September 5, 2017. The SEC noted that the shortened settlement cycle should reduce certain risks in the clearance and settlement process while also enhancing efficiency. (9/11/2017) SEC press release. Chief Accountant addresses ICO financial reporting requirements. In remarks at the AICPA National Conference on Banks & Savings Institutions, SEC Chief Accountant Wesley R. Bricker discussed the role of financial reporting in financial and capital markets; recent accounting and auditing standard setting; the importance of broker-dealer compliance; and regulatory and financial reporting requirements relating to initial coin offerings. (9/11/2017) Bricker remarks. Commissioners advocate for more analysis of ETPs. SEC Commissioners Michael S. Piwowar and Kara M. Stein delivered remarks at the SEC-NYU Dialogue on Exchange-Traded Products. Commissioner Piwowar highlighted the need for more “rigorous academic study” of the effects of ETPs on capital formation, market efficiency, and investor protection. Commissioner Stein observed that more high quality research can help the SEC develop “data-driven answers” to “key questions about ETP trading, volatility, transparency, and investor protection.” (9/8/2017) Other Developments Requirements for hyperlinks in filings are in effect. Requirements that issuers include a hyperlink to each exhibit in public company filings made to the SEC are now in effect. Compliance Week. EDGAR Form TA XML Technical Specification (Version 1.2). The SEC posted EDGAR Form TA XML Technical Specification (Version 1.2), which provides a basis for creating Form TA submissions. The SEC expects that software developers, working on behalf of filers, will be able to construct software that will generate a Form TA XML submission that can be successfully processed by the EDGAR system. (9/11/2017) SEC, MSRB, and FINRA announce joint municipal advisor compliance event. The SEC’s Office of Compliance Inspections and Examinations, the Municipal Securities Rulemaking Board, and the Financial Industry Regulatory Authority have FOLLOW US 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 4/13 opened registration for the Compliance Outreach Program for Municipal Advisors, which will be held on November 8, 2017. The agenda includes panel discussions of the duties and standards of conduct for non-solicitor municipal advisors under MSRB Rule G-42 and the Securities and Exchange Act, and municipal advisor compliance with supervision, registration, and books and records rules. (9/11/2017) SEC press release. SEC announces Small and Emerging Companies Advisory Committee meeting agenda. The SEC’s Small and Emerging Companies Advisory Committee will meet on September 13, 2017, to discuss the Sarbanes-Oxley Act auditor attestation requirement and possible updates to Securities Act Rule 701. The committee also will vote on a final report that would be issued before the committee’s charter expires on September 24, 2017. (9/7/2017) SEC press release. Staff announcements. The SEC announced that it has named Bridget Fitzpatrick Chief Litigation Counsel of the SEC, while David Gottesman will continue to serve as the agency’s Deputy Chief Litigation Counsel. (9/7/2017) Dalia Blass has been named Director of the Division of Investment Management. Jeffrey Harris will serve as Director of the Division of Economic and Risk Analysis. SEC Chairman Jay Clayton announced the appointment of several new members of his executive staff. (8/31/2017) SEC prepares to offer relief and assistance following Hurricane Harvey. SEC Chairman Jay Clayton has directed the agency’s Divisions and Offices to monitor the impact of Hurricane Harvey on investors and capital markets and offer any necessary assistance. (8/30/2017) SEC press release. SEC tells investors to look out for ICO-related fraud. The SEC warned investors about potential fraudulent schemes involving companies offering stock that they claim are related to initial coin offerings (“ICOs”). (8/28/2017) SEC investor alert. OIG review finds Piwowar did not exceed authority as Acting Chairman. The SEC’s Office of Inspector General completed its review of certain actions taken by SEC Commissioner Michael S. Piwowar during his tenure as Acting SEC Chairman, finding that Commissioner Piwowar’s actions did not violate any of the laws currently governing the SEC, undermine the SEC’s mission, or potentially prove to be a waste of SEC staff time and resources. (8/25/2017) OIG report. Fiscal year 2018 registration fee rates. The SEC issued an order adjusting the registration fees rates applicable under Section 6(b) of the Securities Act and Sections 13(e) and 14(g) of the Securities Exchange Act. Effective October 1, 2017, the fee rates will increase from US$115.90 per million dollars to US$124.50 per million dollars. (8/24/2017) SEC press release. Back to top US Commodity Futures Trading Commission Developments New CFTC Commissioner is sworn in. The CFTC announced that Rostin Behnam was officially sworn in to serve as a CFTC Commissioner. He was unanimously confirmed by the US Senate on August 3, and his term expires in June 2021. (9/6/2017) Back to top US Banking Developments OCC OCC to host MDIAC meeting. The OCC announced that it will be hosting a public meeting of the Minority Depository Institutions Advisory Committee on Tuesday, October 3, 2017, beginning at 8:30 a.m., Eastern Daylight Time. The meeting will be 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 5/13 held at the Office of the Comptroller of the Currency, 400 7th Street, SW, Washington, DC 20219. Flood Disaster Protection Act. The OCC announced that it has issued the “Flood Disaster Protection Act” booklet of the Comptroller’s Handbook. This revised booklet provides information on changes to the flood insurance requirements resulting from recent amendments to the Flood Disaster Protection Act and the flood insurance regulations and makes other clarifying changes. (9/7/2017) Revised Foreword booklet and rescissions. The OCC announced that it has issued the “Foreword” booklet of the Comptroller’s Handbook. This booklet describes the overall organization and format of the Comptroller’s Handbook and lists the booklet titles that compose the handbook. (9/7/2017) New Accounting Standard on Financial Instruments – Credit Losses: additional interagency FAQs. The OCC announced that it, along with the Federal Reserve, the FDIC, and the NCUA, have published additional frequently asked questions to assist financial institutions and examiners with the new accounting standard, Accounting Standards Update 2016-13, Topic 326, “Financial Instruments– Credit Losses,” issued by the FASB on June 16, 2016. (9/6/2017) Supervisory practices regarding financial institutions and borrowers affected by Hurricane Irma. The OCC, along with the Board of Governors of the Federal Reserve System, the FDIC, and state bank regulators, announced that they will provide regulatory assistance to institutions affected by Hurricane Irma. (9/6/2017) National banks and federal savings associations affected by Hurricane Irma are allowed to close. The OCC issued a proclamation allowing national banks and federal savings associations directly affected by Hurricane Irma to close. See OCC Bulletin 2012-28 “Supervisory Guidance on Natural Disasters and Other Emergency Conditions” for guidance on actions bankers should consider implementing when their bank or savings association operates or has customers in areas affected by a natural disaster or other emergency. (9/5/2017) Revised Comptroller’s Licensing Manual booklet: Change in Bank Control. The OCC announced that it has issued the “Change in Bank Control” booklet of the Comptroller’s Licensing Manual, which addresses acquisitions of control of national banks and federal savings associations. (9/1/2017) Notice of proposed rulemaking to shorten settlement cycle. The OCC and the FDIC announced that they have issued a notice of proposed rulemaking to shorten the standard settlement cycle for securities purchased or sold by national banks, federal savings associations, and FDIC-supervised institutions. Comments will be accepted for 30 days from publication in the Federal Register. (9/1/2017) National banks and federal savings associations encouraged to work with customers affected by Hurricane Harvey. The OCC encouraged national banks and federal savings associations to work with customers affected by Hurricane Harvey. OCC Bulletin 2012-28 provides examples of steps national banks and federal savings associations may take to support customers affected by natural disasters. (8/29/2017) See Lessons Learned From Hurricane Katrina: Preparing Your Institution for a Catastrophic Event. Compliance and Operational Risk workshops in Chicago. The OCC announced that it will be hosting host two workshops in Chicago at the Crowne Plaza Chicago West Loop, October 3 and 4, for directors of national community banks and federal savings associations supervised by the OCC. The October 3 Compliance Risk workshop will combine lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. The workshop will also focus on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance areas of 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 6/13 interest. The October 4 Operational Risk workshop will focus on the key components of operational risk: people, processes, and systems. The workshop will also cover governance, third-party risk, vendor management, and cybersecurity. (8/29/2017) Regulatory capital rule: notice of proposed rulemaking. The OCC, the Board of Governors of the Federal Reserve System, and the FDIC announced that they are seeking comment on a proposed rule that would extend the current treatment under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority interest requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Comments on the proposal must be received by September 25, 2017. (8/29/2017) Statement on supervisory practices regarding financial institutions and borrowers affected by Hurricane Harvey. The OCC, the Board of Governors of the Federal Reserve System, the FDIC, and state bank regulators issued a statement on supervisory practices regarding financial institutions and borrowers affected by Hurricane Harvey. (8/26/2017) Updates to FFIEC examination procedures. The OCC announced that is has issued a bulletin to inform national banks, federal savings associations, and federal branches and agencies and all OCC examining personnel about new FFIEC examination procedures for testing and validating the accuracy and reliability of home mortgage loan data that will be reported under the HMDA rule, effective January 1, 2018. See CFPB blog: Here’s what you need to know about the new FFIEC HMDA Examiner Transaction Testing Guidelines. (8/25/2017) Risk governance and credit risk workshops to be held in Indiana. The OCC announced that it will be hosting two workshops at the Indianapolis Marriott East, Indianapolis, Ind., September 26-27, for directors of national community banks and federal savings associations supervised by the OCC. The September 26 Risk Governance workshop will provide practical information for directors to effectively measure and manage risks. The workshop will also focus on the OCC’s approach to risk-based supervision and major risks in the financial industry. The September 27 Credit Risk workshop will focus on credit risk within the loan portfolio, such as identifying trends and recognizing problems and will cover the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change. (8/24/2017) Substantial Asset Changes, Including Changes in Charter Purpose booklet issued. The OCC announced that it has issued the “Substantial Asset Changes, Including Changes in Charter Purpose” booklet of the Comptroller’s Licensing Manual. The revised regulations address substantial changes in assets and changes in charter purpose for national banks and federal savings associations. (8/23/2017) Appraisals for CRE transactions. The OCC announced that it is inviting comment on a proposed rule to increase the appraisal threshold for commercial real estate (CRE) transactions from US$250,000 to US$400,000. The proposed rule, which is being issued jointly with the Board of Governors of the Federal Reserve System and the FDIC, makes conforming amendments to the appraisal rules to require that banks obtain evaluations in lieu of Title XI appraisals for transactions covered by the CRE threshold exemption. The proposal also would make a conforming technical change to the requirement for the use of certified appraisers for certain transactions. The comment period for the proposed rule ends on September 29, 2017. (8/23/2017) OCC, Federal Reserve, FDIC propose extension of certain capital rule transitions. The OCC, along with the Board of Governors of the Federal Reserve System, and the FDIC, announced that they have proposed a rule that would extend the existing transitional capital treatment for certain regulatory capital deductions and risk weights. The extension would apply to banking organizations that are not subject to the agencies’ advanced approaches capital rules. Comments on this proposal will be accepted for 30 days after publication in the Federal Register. The 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 7/13 agencies announced that they are developing a proposal that would simplify the capital rules to reduce regulatory burden, mainly for community banks. However, under the current capital rules, the transitional treatment for those items is scheduled to be replaced with a different treatment on January 1, 2018. Consequently, the agencies are proposing to extend the existing transition provisions for mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests. The agencies expect to propose the simplified regulatory capital requirements in the coming months. (8/22/2017) FDIC Summer edition of Supervisory Insights focuses on liquidity risk and the Bank Secrecy Act. The FDIC announced that it has issued the Summer 2017 issue of Supervisory Insights, which includes articles on liquidity risk trends at community banks and the Bank Secrecy Act supervision program. (8/30/2017) Federal Reserve Next steps for payment system improvement. The Federal Reserve announced that it has published its Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey, a paper identifying updated tactics it will pursue to help improve the speed, safety and efficiency of the US payment system. (9/6/2017) Final rule to enhance financial stability is adopted. The Board announced that it has adopted a final rule to enhance financial stability by requiring US global systemically important banking institutions (GSIBs) and the US operations of foreign GSIBs to amend qualified financial contracts to prevent their immediate cancellation or termination if the firm enters bankruptcy or a resolution process. Compliance will phase in beginning on January 1, 2019. (9/1/2017) Board willing to tweak, not strip, corporate governance rules. Corporate Counsel reported that the Federal Reserve Board has offered to tweak corporate governance rules in an effort to ease the oversight burden on boards of directors at large U.S. banks. (8/30/2017) Board requests public comment requested on proposal to produce three new reference rates based on overnight repurchase agreement transactions secured by Treasuries. The Federal Reserve Board requested public comment on a proposal for the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, to produce three new reference rates based on overnight repurchase agreement transactions secured by Treasuries. Comments on the proposal to produce the three rates are due within 60 days of publication in the Federal Register, which is expected shortly. (8/24/2017) CFPB Annual dollar thresholds in TILA regulations for certain credit transactions. The CFPB announced its annual adjustments to the dollar amounts of various thresholds under Truth in Lending Act regulations that will apply to certain consumer credit transactions in 2018. The adjustments are based on the annual percentage change in the Consumer Price Index. (8/30/2017) Back to top US Exchanges and Self-Regulatory Organizations FINRA solicits nominations for upcoming elections. FINRA notified firms that it will hold elections to fill vacancies on its Small Firm Advisory Board and FINRA District Committees. The nomination deadline for eligible candidates is October 9, 2017. (9/8/2017) 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 8/13 FINRA CEO indicates FINRA might release BrokerCheck data “in bulk.” In testimony before the US House of Representatives Subcommittee on Capital Markets, Securities, and Investment, FINRA President and CEO Robert W. Cook provided an overview of FINRA’s operations and regulatory programs. (9/7/2017) FINRA press release. Think Advisor reported that Cook told the committee that FINRA is considering ways to give investors access to bulk data on firms that employ brokers with a history of misconduct. (9/8/2017) NFA will implement new individual application process. The National Futures Association notified members that a new individual application process in its Online Registration System will become effective on September 18, 2017. (9/7/2017) NFA notice. MSRB makes available new market-wide trading statistics. The MSRB has released new market-wide trading statistics on its Electronic Municipal Market Access website, including a daily state-by-state view of municipal bond trading activity and the most actively traded municipal securities and bond issuers. (9/7/2017) MSRB press release. FINRA offers guidance to investors on ICO risks. FINRA advised investors about the potential risks of participating in ICOs. (8/31/2017) FINRA investor alert. FINRA advises investors to be alert to Harvey-related investment fraud. FINRA informed investors how to recognize and avoid disaster-related investment scams in the wake of Hurricane Harvey. (8/31/2017) FINRA investor alert. FINRA offers guidance on regulatory relief following hurricanes. FINRA notified firms with business locations impacted by Hurricane Harvey about possible relief from regulatory requirements and other compliance issues. (8/30/2017) FINRA regulatory notice. FINRA updated its notice to extend the regulatory relief to firms affected by Hurricane Irma. (9/11/2017) New electronic Form 211 will be required starting in October. FINRA adopted a new electronic Form 211 for the purposes of compliance with FINRA rules requiring firms to fulfill the information requirements of Securities Exchange Act Rule 15c2-11. Firms will be required to use the electronic Form 211 beginning on October 23, 2017, but may begin using the electronic form as of September 11, 2017. (8/24/2017) FINRA regulatory notice. FINRA Board elections and appointments. FINRA announced the results of the election of Governors to its Board of Governors, including the appointment of several Governors, at its July 2017 meetings. (8/22/2017) FINRA press release. Back to top News from Asia and the Pacific Hong Kong SFC issues statement on initial coin offerings. The SFC announced that it has issued a statement on existing regulations, which could be applicable to initial coin offerings. (9/5/2017) SFC issues first-quarter report. The SFC announced that it has published its Quarterly Report summarizing key developments from April to June 2017. Highlights of the report include the launch of a consultation on proposed guidelines on the design and operation of online platforms as well as a consultation on proposals to reduce and mitigate hacking risks associated with internet trading. (8/29/2017) SFC and DFSA sign Fintech cooperation agreement. The SFC announced that it has entered into a cooperation agreement with the Dubai Financial Services 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 9/13 Authority to establish a framework for mutual assistance to keep abreast of the development and application of financial technology. (8/28/2017) SFC and Hong Kong Police sign MoU to strengthen co-operation in combating financial crime. The SFC announced that it and the Hong Kong Police entered into a Memorandum of Understanding to formalize and further strengthen co-operation in combating financial crime. The MoU covers a range of matters including referral of cases, joint investigations, exchange and use of information, mutual provision of investigative assistance, and establishes a framework for closer collaboration on policy, operational and training issues. (8/25/2017) Singapore UK and Singapore hold third Financial Dialogue. The MAS announced that the UK and Singapore have held the third UK-Singapore Financial Dialogue in Singapore. Both sides exchanged views on domestic and international financial market developments and covered a broad range of areas encompassing the global economy, regulatory developments, FinTech and cybersecurity. (9/7/2017) Recent economic developments in Singapore, September 2017. The MAS published a brief to provide a quick pictorial summary of recent economic developments in the Singapore economy. (9/5/2017) Payments Council sets up taskforce to develop common QR code for Singapore. The MAS announced that the Payments Council is establishing interoperable electronic payments and developing a common QR code, (8/29/2017) Exploring e-payments for the heartlands. The MAS announced that it, along with the National Environment Agency, Housing & Development Board (HDB), and Smart Nation and Digital Government Office have jointly issued a Request for Information for electronic payment solutions to support micro-payments mainly at hawker centers, HDB coffee shops, and shops in the heartlands. (8/25/2017) Australia ASIC releases market integrity report. ASIC announced that it has released its latest report on market integrity for the period January 1 to June 30, 2017. (9/11/2017) ASIC bans flex commissions in car finance market. ASIC announced that it has formally banned flex commissions in the car finance market, with the legislative instrument to ban these commissions registered on the Federal Register of Legislative Instruments. (9/7/2017) ASIC’s Corporate Plan 2017–18 to 2020–21 and focus for 2017–18. ASIC announced that it has published its Corporate Plan for 2017–18 to 2020–21. (9/1/2017) Insolvency regulators welcome start of second tranche of insolvency law reforms. ASIC announced that it, along with the Australian Financial Security Authority, have welcomed the start of the second and final tranche of reforms introduced by the Insolvency Law Reform Act 2016. The reforms aim to increase efficiency, reduce administration costs and promote market competition in personal and corporate insolvency in Australia. (9/1/2017) Professional indemnity insurance review completed. ASIC announced that its targeted review of professional indemnity (PI) insurance has found that most small companies holding Australian financial services licenses had PI insurance that met regulatory requirements. (8/29/2017) Corporate finance regulation: January to June 2017. ASIC announced that it has published its seventh report on the regulation of corporate finance issues in 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 10/13 Australia. The report covers the period January to June 2017. (8/28/2017) National Stock Exchange’s listing standards. ASIC announced that it has released its assessment report on the listing standards of the National Stock Exchange of Australia Limited (NSX). The report concludes that NSX should make a number of changes to improve compliance with its statutory obligations. (8/28/2017) Super fees set to become more transparent and easier to understand. ASIC announced that, beginning on September 30, 2017, there will be significant changes to the way superannuation and managed investment funds disclose the fees and charges that affect consumers. (8/25/2017) ASIC remakes sunsetting class order on disclosure relief for an offer to a director or secretary. ASIC announced that it has remade Class Order [CO 04/899] Definition of ‘senior manager’ – modification, which was due to expire on October 1, 2017. The new instrument, ASIC Corporations (Disclosure Relief—Offers to Associates) Instrument 2017/737, continues to provide disclosure relief for an offer of securities to a director or secretary. (8/24/2017) ASIC consults on reforms to add-on insurance sales to drive better outcomes for consumers. ASIC announced the release of its consultation paper seeking feedback on proposals to reform the sale of add-on insurance and warranties through car dealerships. Comments on the proposal must be submitted by October 23, 2017. (8/24/2017) ASIC launches Small Business Strategy 2017-2020. ASIC announced that it has outlined its approach and broader vision for working with small business with the launch of its Small Business Strategy 2017-2020. (8/24/2017) Back to top News from Europe European Union European Central Bank Monetary policy decisions. The ECB announced that its Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. (9/7/2017) ESMA ESMA updates Q&A on MiFID II implementation. ESMA announced that it has published updated Questions and Answers (Q&As) regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). (9/12/2017) ESMA sees valuation risk at highest levels due to financial weakness and geopolitical uncertainty. ESMA announced that its latest report on Trends, Risks and Vulnerabilities No. 2, 2017 identifies high asset price valuations as the major risk for European financial markets in the second half of 2017. (9/12/2017) ESMA agrees to prolongation of short selling ban by Spanish CNMV. ESMA announced that it has issued an official opinion agreeing to the prolongation of an emergency short selling prohibition by the Comisión Nacional del Mercado de Valores (CNMV) on net short positions in Liberbank, S.A. shares under the Short Selling Regulation. (9/12/2017) MiFID II: ESMA publishes transitional transparency calculations for bonds and updates calculations for two other asset classes. ESMA announced that it has 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 11/13 updated its transitional transparency calculations for non-equity instruments in relation to the implementation of the Markets in Financial Instruments Directive/ Markets in Financial Instruments Regulation (MiFID II/ MiFIR). (9/11/2017) Hear from Dombrovskis, Barnier, Gualtieri and Alder at the ESMA Conference. ESMA announced that its conference, which takes place in Paris on Tuesday October 17, 2017, will focus on developments in the EU’s financial services markets. (9/5/2017) ESMA updates Q&A on MAR. ESMA announced that it has updated its Questions & Answers document regarding the implementation of the Market Abuse Regulation. (9/1/2017) ESMA publishes the responses to its Consultation on CCPs management of conflict of interest. ESMA announced that it has published the responses received to its Consultation on guidelines on CCPs conflict of interest management. (8/25/2017). ESMA issues guidelines on portability of data between trade repositories. ESMA announced that it has issued final guidelines on data transfer between Trade Repositories authorized under the European Market Infrastructure Regulation. (8/24/2017) European Banking Authority The EBA CRDIV CRR Basel III monitoring exercise shows further improvement of EU banks capital leverage and liquidity ratios. The EBA announced that it has published its twelfth Report of the CRDIV-CRR/Basel III monitoring exercise on the European banking system. This exercise presents aggregate data on EU banks’ capital, leverage, and liquidity ratios assuming full implementation of the CRD IVCRR/Basel III framework. Overall, the results, based on data as of December 31, 2016, show a further improvement of European banks’ capital positions, with a total average Common Equity Tier 1 ratio of 13.4% (12.8% as of June 30, 2016). (9/12/2017) 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 (ITS) on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering IT problems. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules. (9/11/2017) EBA publishes final technical standards on MREL reporting by resolution authorities. The EBA announced that it has published its final draft implementing technical standards specifying templates and procedures resolution authorities should follow when informing the EBA of the minimum requirement for own funds and eligible liabilities (MREL) that have been set for institutions under their jurisdiction. These standards will enable the EBA to monitor the consistency of MREL implementation across the EU. (9/5/2017) United Kingdom FCA advises consumers about the risks of ICOs. The UK Financial Conduct Authority released a statement warning consumers about the risks of ICOs, including the lack of a regulatory framework governing these investments and their susceptibility to price volatility and fraudulent schemes. (9/12/2017) FCA statement. PRA proposes to adjust fee rates for its Annual Funding Requirement. The Prudential Regulation Authority published a consultation paper that proposes to correct the fee rates for the PRA’s Annual Funding Requirement for 2017/18, noting that the rates published in a recent policy statement did not reflect current data from firms. Comments are due on or before October 12, 2017. (9/12/2017) PRA press 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 12/13 release. BOE highlights financial reforms to mark ten years after the financial crisis. The Bank of England published a fact sheet that provides an overview of the reforms put in place over the last ten years to make the financial system safer following the financial crisis of 2007. (9/8/2017) BOE press release. FCA quarterly consultation paper. The FCA requested comments on a quarterly consultation paper, which proposes miscellaneous, minor changes to its Handbook. Comments on proposals related to the Insurance Distribution Directive, the Prudential sourcebook for Investment Firms, and the Packaged Retail and Insurance-based Investment Products’ key information document are due on or before October 2, 2017. Comments on the remaining proposals are due on or before November 1, 2017. (9/1/2017) FCA press release. PRA updates supervisory disclosures under Solvency II. The PRA released updated versions of its public disclosure under Solvency II, which includes templates for the disclosure of aggregate statistical data regarding insurance and reinsurance undertakings and insurance groups. (9/1/2017) PRA Solvency II news page. Back to top Global Regulators Basel Committee issues Basel III monitoring report. The Basel Committee on Banking Supervision released the results of the most recent Basel III monitoring exercise, which includes data as of December 31, 2016, from a total of 200 banks. Among other things, the report found that all banks met both the Basel III risk-based capital minimum Common Equity Tier 1 requirement and the target level CET1 that will be required when the requirements are fully phased-in on January 1, 2019. (9/12/2017) BIS press release. ISDA launches new version of ISDA SIMM. The International Swaps and Derivatives Association updated its Standard Initial Margin Model for non-cleared derivatives to include, among other things, new risk factors for volatility indices, quanto credit default swaps, and municipal swaps. The changes to ISDA SIMM will go into effect on December 4, 2017. (9/7/2017) ISDA press release. Basel Committee and IFRS Foundation sign MoU. The Basel Committee announced that it has entered a new Memorandum of Understanding with the IFRS Foundation to strengthen their future cooperation on the development of IFRS Standards, the interaction between IFRS Standards and the BCBS Framework, and the practical application of the Standards and the Framework by global financial institutions. (9/5/2017) BIS press release. OTC Derivatives Compliance Calendar. ISDA updated its OTC Derivatives Compliance Calendar. (9/1/2017) OTC Derivatives Compliance Calendar. FSB peer review of Argentina. The Financial Stability Board published its peer review of Argentina, which focused on the steps Argentine authorities have taken to implement reforms related to the macroprudential policy framework and the framework for crisis management and resolution. The review concluded that some progress has been made in both areas and made recommendations for additional work to address outstanding issues and future challenges. (8/31/2017) FSB press release. Basel Committee seeks comments on fintech consultative document. The Basel Committee published a consultative document that assesses how fintech may affect the banking industry and the activities of supervisors and makes recommendations on supervisory issues for consideration by banks and bank supervisors in ten key areas. Comments are due on or before October 31, 2017. (8/31/2017) BIS press release. 18/09/2017 DLA Piper September 14, 2017 file://intranet.gbp.co.uk/Public/Win8Profiles/cidowu/Downloads/The%20Financial%20Report%20Vol%206%20No%2017.html 13/13 Back to top Published by DLA Piper LLP (US) © 2017 DLA Piper LLP (US) News items other than “Discussion and Analysis” © 2017 LexisNexis. LexisNexis, Lexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc. used under license. Securities Mosaic is a registered trademark of Reed Elsevier Inc. used under license. 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