Best Execution

On July 30th, Reuters reported the SEC may consider exceptions to its best execution rules which require brokerages to complete a trade as fast as possible. Best Execution.

BATS Exchange

Amendments to Competitive Liquidity Provider Program Approved

On July 28th, the SEC approved BATS Exchange’s proposed addition of Interpretation and Policy .03 to Rule 11.8 to establish the Supplemental Competitive Liquidity Provider Program for Exchange Traded Products (“ETPs”) listed on the Exchange for a one year pilot period, and to amend Interpretation and Policy .02 to Rule 11.8, which governs the existing Competitive Liquidity Provider Program (“CLP Program”), to reflect the transition for Exchange-listed ETPs from the existing CLP Program to the proposed Program. SEC Release No. 34-72692.

Financial Industry Regulatory Authority

An Arbitrary Debate

On July 31st, Reuters summarized the comments submitted in response to the Financial Industry Regulatory Authority’s proposal that would limit who would be considered a “public arbitrator” for purposes of FINRA customer arbitrations. Arbitrary Debate.

SEC Approves Rule Limiting Expundements

On July 30th, the Financial Industry Regulatory Authority advised that the SEC has approved FINRA Rule 2081 (Prohibited Conditions Relating to Expungement of Customer Dispute Information) to prohibit member firms and associated persons from conditioning or seeking to condition settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer’s agreement to consent to, or not to oppose, the firm’s or associated person’s request to expunge such customer dispute information from the Central Registration Depository. The rule is effective immediately. FINRA Regulatory Notice 14-31.

International Swaps and Derivatives Association

Bilateral Form of Amendment Agreement for Certain Silver Transactions

On July 30th, the International Swaps and Derivatives Association published a Bilateral Form of Amendment Agreement for Certain Silver Transactions, which addresses the winding down of the administration of the London Silver Fix by the London Silver Market Fixing Limited on August 14, 2014. ISDA Press Release.

Municipal Securities Rulemaking Board

Municipal Securities Advisor Amendments Proposed

On July 29th, the SEC provided notice of the Municipal Securities Rulemaking Board’s filing of a proposed rule change that would add new Rule G-44, on supervisory and compliance obligations of municipal advisors; amend Rule G-8, on books and records to be made by brokers, dealers and municipal securities dealers; and amend Rule G-9, on preservation of records. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 4. SEC Release No. 34-72706.

Continuing Education Changes Proposed

On July 29th, the SEC provided notice of the Municipal Securities Rulemaking Board’s filing of a proposed rule change aimed at improving the Firm Element continuing education requirement of MSRB Rule G-3(h)(ii) by requiring brokers, dealers and municipal securities dealers to conduct annual municipal securities training for registered representatives who regularly engage in, and municipal securities principals who regularly supervise, municipal securities activities. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 4. SEC Release No. 34-72705.

NYSE

Longer Period Designated for Consideration of Open Outcry Proposal

On July 29th, the SEC designated October 1, 2014 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding NYSE Arca’s proposed rule change to revise the order of priority of bids and offers when executing orders in open outcry. SEC Release No. 34-72703.

The Options Clearing Corporation

Price Reasonableness Checks Proposed

On July 30th, the SEC provided notice of The Options Clearing Corporation’s filing of a proposal that would implement price reasonableness checks in connection with the reporting of confirmed trades in standardized options and futures options to OCC by an Exchange. The proposed rule change will promote OCC’s ability to protect itself and clearing members from the negative effects of clearing trades in standardized options and futures options that may contain erroneous premium information. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 4. SEC Release No. 34- 72718.

Wrong-Way Risk Proposal Filed

On July 30th, the SEC provided notice of The Options Clearing Corporation’s filing of a proposed amendment to its Rules to permit OCC to better manage concentration and other risks (i.e., wrong-way risk) associated with accepting deposits of common stock for margin purposes. In order to manage such risks, OCC proposes to add a proposed Interpretation and Policy that will provide OCC with discretion with respect to giving value to margin collateral deposited by a single clearing member. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of August 4. SEC Release No. 34-72717.

Amendments to Curtail “Dividend Plays” Proposed

On July 25th, the SEC provided notice of The Options Clearing Corporation’s filing of a proposed rule change that would, along with certain systems modifications, curtail use of a trading strategy known as “dividend plays” in the options industry. OCC proposes to add an interpretation and policy to Rules 801 and 805, respectively, stating that OCC will process all sales of options in a Market-Maker’s account prior to the exercise of any long call options in the account to ensure that only net long positions in a particular series may be exercised. Comments should be submitted on or before August 21, 2014. SEC Release No. 34-72677.