Regulatory Orders

Tick size pilot. A proposal submitted by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) for a two-year test of a program that widens the minimum quoting and trading increments for stocks of some smaller companies has been approved. The Securities and Exchange Commission will use the test to determine whether wider tick sizes enhance the market quality of these stocks. The test program will start by May 6, 2016, and will include stocks of companies with US$3 billion or less in market capitalization, an average daily trading volume of one million shares or less, and a volume weighted average price of at least US$2.00 for every trading day. (5/6/2015) SEC press release.

Speeches and Statements

Enforcement Division statement on forum selection. The Division of Enforcement published a statement that outlines how it determines whether a contested enforcement action will be initiated as an administrative proceeding before a SEC administrative law judge or as a federal court lawsuit. In doing so, the Enforcement Division noted that establishing Commission precedent in novel or undeveloped areas of the law is a consideration. (5/8/2015) Statement. See also Ceresney speech (5/12/2015). 

Chair White addresses Equity Market Structure meeting. Giving the opening remarks at the Equity Market Structure Advisory Committee’s first meeting, SEC Chair Mary J. White told attendees that she has asked Commission staff to submit several market structure rulemaking recommendations. The request seeks, among other things, proposals that address risk management of trading algorithms and the enhancement of regulatory oversight of trading algorithms. (5/13/2015) White statement.

Director Ceresney speaks at University of Texas Law School. The Director of the Enforcement Division, Andrew Ceresney, outlined the SEC’s cooperation program, explaining how the Enforcement Division uses cooperation agreements and other cooperation tools. In doing so, Ceresney highlighted the benefits that an enforcement target can experience through cooperation. He also noted the history of the Division’s use of cooperation agreements, admissions, and reverse proffers. (5/13/2015) Ceresney speech.

Acting Director Wyatt discusses private equity. The Office of Compliance Inspections and Examination’s (OCIE) Presence Exam Initiative for private equity funds was outlined by OCIE Acting Director Marc Wyatt. Although the industry has experienced many positive developments, areas requiring improvement still exist. They include expenses and expense allocation and co-investment allocation. Future areas of focus include real estate private equity advisers, credit advisers, and infrastructure and timber advisers. (5/13/2015) Wyatt speech. 

Commissioner Aguilar’s statement on market structure. SEC Commissioner Luis A. Aguilar presented his proposed framework for assessing the quality of the equity markets. The proposal includes Aguilar’s policy goals for market structure review and his concerns regarding the proliferation of trading venues and the competition for order flow. (5/11/2015) Aguilar statement. 

Chief Accountant Schnurr addresses Baruch College. Discussing the convergence of US Generally Accepted Accounting Principles with International Financial Reporting Standards, the SEC Chief Accountant, James Schnurr, advised that he is preparing a recommendation to the Commission on how the two should be approached. (5/7/2015) Schnurr speech. 

Other Developments

Small and Emerging Companies Advisory Committee. The SEC’s Advisory Committee on Small and Emerging Companies will hold a public meeting on June 3, 2015. (5/18/2015) SEC Release No. 33-9774. 

Draft EDGAR manuals. The SEC published draft EDGARLink Online XML Technical Specification (Version 16) and draft EDGAR Filer Manual (Volume II) EDGAR Filing (Version 32). (5/15/2015)

Broker-dealer compliance. The SEC and the Financial Industry Regulatory Authority (FINRA) have opened registration for their 2015 National Compliance Outreach Program for Broker-Dealers. The program will occur on July 14, 2015, at the Washington, D.C. headquarters of the SEC. (5/8/2015) SEC press release. 

Regulation SCI outreach. Registration for the SEC’s program to help firms comply with Regulation Systems Compliance and Integrity (Regulation SCI) has opened. Sponsored by OCIE in coordination with the Division of Trading and Markets, the programs will occur on July 16, 2015, at the SEC’s New York Regional Office and on July 29, 2015, at the SEC’s Chicago Regional Office. (5/5/2015) SEC press release. 

Automated investment tools. The Office of Investor Education and Advocacy and FINRA published an investor alert regarding automated investment tools. (5/8/2015) Investor alert. Think Advisor suggested that the alert be used by automated tool sponsors as a compliance template. (5/11/2015) Compliance.

Staff announcements. The SEC announced that SEC Chief of Staff Lona Nallengara will be leaving the agency at the end of June. Peter J. Curley, Associate Director for Clearing and Settlement in the Division of Trading and Markets, is also leaving. (5/18/2015) David Grim has been named Director of the Division of Investment Management following the departure of Norm Champ. (5/8/2015)Daniel Murdock, a Deputy Chief Accountant overseeing the accounting group in the agency’s Office of the Chief Accountant, is leaving at the end of May. (5/14/2015) Wesley R. Bricker has been named a Deputy Chief Accountant overseeing the accounting group in the Office of the Chief Accountant. (5/14/2015)