Chicago Board Options Exchange
Amendments Regarding Trade Nullification and Price Adjustments Proposed
On June 13th, the SEC provided notice of the Chicago Board Options Exchange’s filing of a proposed amendment to add Rule 6.19, “Trade Nullification and Price Adjustment Procedure.” As proposed, Rule 6.19 would allow for transactions to be nullified if both parties to the transaction agree to the nullification and allow the price of executions to be adjusted if the price adjustment is agreed to by both parties to the transaction and authorized by the Exchange. The Exchange is also proposing to make other conforming administrative changes to streamline the rules governing this subject within the Exchange’s rules. Comments should be submitted on or before . SEC Release No. 34-72390.
The Depository Trust Company
Disapproval Proceedings Extended for Book Entry Services Proposal
On June 13th, the SEC designated August 21, 2014 as the date by which it will approve or disapprove The Depository Trust Company’s proposal regarding the procedures available to issuers of securities deposited at DTC for book entry services when DTC imposes or intends to impose restrictions on the further deposit and/or book entry transfer of those securities. SEC Release No. 34-72391.
Clearance of Non-Investment Grade Instruments Approved.
On June 19th, the SEC approved ICE Clear Credit’s proposed expansion of its product offerings to provide for the clearance of additional non-investment grade instruments on Standard North American Corporate Single Name reference entities. SEC Release No. 34-72437.
Changes to Permitted Cover Proposed
On June 18th, the SEC provided notice of ICE Clear Europe’s filing of a proposal that would limit the use of non-USD collateral for original margin requirements by FCM/BD Clearing Members in connection with customer transactions in the F&O product category, in order to address certain U.S. and E.U. regulatory requirements. Specifically, following implementation of this change, ICE Clear Europe would no longer accept cash or non-cash collateral denominated in currencies other than U.S. dollars to meet original margin requirements for the DCM Customer Account of FCM/BD Clearing Members (also known as the “W” account or “Section 4d(a) account”), which is subject to the segregation requirements of Section 4d(a) and (b) of the Commodity Exchange Act and the Commodity Futures Trading Commission’s regulations thereunder. In addition, in connection with this change, FCM/BD Clearing Members will be required to withdraw non-USD variation margin balances credited to the Section 4d(a) account on a daily basis and cannot use such balances to cover original margin requirements in that account. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of June 23. SEC Release No. 34-72421.
Proposed Changes to Valuation Methodology Approved
On June 16th, the SEC approved ICE Clear Credit’s proposed update to its policy regarding valuation of maturing U.S. Treasury securities and to its collateral asset haircut methodology. Under the proposed change, ICC will reduce the collateral valuation of maturing securities to $0 two business days prior to maturity. Clearing Participants will receive notice the week prior to any collateral maturity dates and will be encouraged to replace maturing securities with other acceptable collateral. If collateral matures while on deposit with ICC, proceeds will be credited to the margin or guaranty fund account, as appropriate, when received by ICC on the maturity day. SEC Release No. 34-72397.
International Securities Exchange
Proposed Rule Change on Bid/Offer Differentials for In-The-Money Option Series.
On June 16th, the SEC provided notice of the International Securities Exchange’s filing of a proposed rule change that would require market makers quoting certain in-the-money options series maintain quotes that are no wider that the spread between the NBBO in the underlying security. Comments should be submitted on or before July 11, 2014. SEC Release No. 34-72399.
Municipal Securities Rulemaking Board
Amendments to Rules G-3, G-7, and G-27 Proposed
On June 18th, the SEC provided notice of the Municipal Securities Rulemaking Board’s filing of proposed amendments to MSRB Rule G-3(a) to limit the scope of permitted activities of a limited representative – investment company and variable contracts products (“Limited Representative”) to sales to and purchases from customers of municipal fund securities; (2) eliminate the Financial and Operations Principal (“FINOP”) classification, qualification and numerical requirements in MSRB Rule G-3(d); (3) clarify in Supplementary Material .01 to Rule G-3 that references to sales include the solicitation of sales of municipal securities; and (4) make certain technical amendments to (i) re-title Rule G-3 and its subparagraph (a) and define the Limited Representative classification, (ii) reorganize Rules G-3 and G-7(a), and (iii) remove references to the FINOP in Rules G-7 and G-27. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of June 23. SEC Release No. 34-72425.
On June 19th, NYSE Regulation advised that following the close of trading on June 27, 2014, the Russell Investment Group will reconstitute certain of its indices. This reconstitution may significantly affect the volume of trading on the New York Stock Exchange and NYSE MKT LLC. Members are reminded of certain Exchange Rules and policies regarding entry and cancellation of market-on- close/limit-on-close and Closing Offset orders; publication of on-the-close imbalances; and printing the closing transaction. Guidance on possible system interruption scenarios and the operation of certain Exchange Rules and policies in the event that such a scenario occurs is also included. NYSE Regulation Information Memo 14-10.