On August 13th, the SEC approved the Chicago Board Options Exchange’s proposal to define a “Tied to Stock Order” and establish reporting requirements for Tied to Stock Orders. Under the proposal, an order is tied to stock (and is, therefore, a Tied to Stock Order) if, at the time the Trading Permit Holder (“TPH”) representing the order on the Exchange receives or initiates the order, the TPH has knowledge that the order is coupled with an order(s) for the underlying stock or a security convertible into the underlying stock (“convertible security” and, together with underlying stock, “non-option”). A TPH must have knowledge of the non-option order for an order to meet the definition of a Tied to Stock Order. SEC Release No. 34-72839.

Chicago Mercantile Exchange

ISDA Definitions

On August 13th, the SEC provided notice of the Chicago Mercantile Exchange’s proposal to adopt the International Swaps and Derivatives Association’s 2014 Credit Derivatives Definitions. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 18. SEC Release No. 34-72837.

Enhancements to Risk Model for CDS Proposed

On August 13th, the SEC provided notice of the Chicago Mercantile Exchange’s filing of proposed changes to the Risk Model for Credit Default Swaps for broad-based index CDS products cleared by CME. The proposal does not apply to security-based swaps. The proposed changes would replace the current multiple market risk factors with a single market risk component calculated by reference to scenarios obtained within a statistical framework that addresses relevant market risk factors affecting a given CDS portfolio; enhance the Idiosyncratic Risk Component with a more systematic approach that avoids double counting of risk with other elements of the Proposed CDS Margin Model; enhance the Liquidity/Concentration Risk Component to incorporate reference entity or index series and maturity-specific liquidity features and to address liquidation risk for highly concentrated positions with a progressively increasing margin requirement; add a risk component for interest rate/discount curve risk; and address foreign exchange related risk that may result from CDS portfolios that include CDS positions denominated in multiple currencies. CME is additionally proposing to add a new CDS Guaranty Fund charge to CDS Clearing Members that clear CDS Products that reference themselves or their affiliates and delete the current threshold based approach. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 18. SEC Release No. 34-72834.

EDGA Exchange

Amendments to Clarify System Functionality Proposed

On August 11th, the SEC provided notice of EDGA Exchange’s filing of a proposed amendment to Rule 1.5 and Chapter XI of its rule book to include additional specificity regarding the current functionality of the Exchange’s System, including the operation of its order types and order instructions. These changes are designed to update the rule book to reflect current system functionality and include: (i) further clarifying the Exchange’s trading sessions and hours of operation by amending Rule 11.1; (ii) describing the process for initial opening and re- opening after a trading halt by adding proposed Rule 11.7, Opening Process; (iii) amending the description of order types, order instructions, and their functionality by deleting the content of Rule 11.5, Order Types and Modifiers, renumbering it as Rule 11.8, and adding proposed Rule 11.6, Definitions; (iv) amending Rule 11.8, Priority of Orders, to provide additional specificity regarding the execution priority of orders and renumbering it as Rule 11.9; and (v) making a series of organizational and conforming changes to Rule 1.5, Rule 8.15, and Chapter XI. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 18. SEC Release No. 34-72812.

Financial Industry Regulatory Authority

FINRA Revises the Series 24 and 23 Examination Programs

On August 13th, the Financial Industry Regulatory Authority (“FINRA”) announced revisions to the General Securities Principal (Series 24) and General Securities Principal Sales Supervisor Module (Series 23) examination programs. The changes are reflected in the Series 24 and 23 content outlines on FINRA’s website and will appear in Series 24 and 23 examinations administered on or after October 13, 2014. FINRA Regulatory Notice 14-33.

ICE Clear Credit

Clearance of Additional Sovereign CDS Proposed

On August 11th, the SEC provided notice of ICE Clear Credit’s (“ICC”) filing of a proposed rule change to adopt rules that will provide the basis for ICC to clear additional credit default swap contracts. ICC proposes to amend Section 26D of its Rules to provide for the clearance of additional Standard Emerging Sovereign Single Name constituents of the CDX Emerging Markets Index. Comments should be submitted on or before September 5, 2014. SEC Release No. 34-72802.

International Swaps and Derivatives Association

ISDA 2014 Credit Derivatives Definitions

On August 8th, the International Swaps and Derivatives Association published the 2014 ISDA Credit Derivatives Definitions. Trading using the new Definitions is scheduled to begin on September 22, 2014. ISDA Press Release. NYSE

Proposed Fee Changes Withdrawn

On August 7th, the SEC advised that NYSE Arca has withdrawn its proposed amendment of its Options Fee Schedule relating to lead market maker rights fees. SEC Release No. 34-72791.