Chicago Board Options Exchange
Amendments to Margin Rules for Certain Volatility Index Options Proposed
On May 7th, the SEC provided notice of the Chicago Board Options Exchange’s filing of proposed amendments to CBOE Rules 12.3 (Margin Requirements) and 12.4 (Portfolio Margin) to increase the minimum margin requirements for certain 30-day volatility index options and for options on the VXST Index, which is designed to reflect investors’ consensus view of 9-day expected stock market volatility. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of May 12. SEC Release No. 34-72115.
Longer Period Designated to Consider Proposed New Order Type
On May 2nd, the SEC designated June 23, 2014 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding EDGX Exchange’s proposed amendment adding a new order type called the Mid-Point Discretionary Order and to reflect the priority of Mid-Point Discretionary Orders. SEC Release No. 34-72086.
Financial Industry Regulatory Authority
Amendments to Corporate Financing Rule Approved
On May 7th, the SEC approved the Financial Industry Regulatory Authority’s proposed amendments to FINRA Rule 5110 (Corporate Financing Rule-Underwriting Terms and Arrangements) which would change provisions regarding unfair arrangements to: (1) expand the circumstances under which members and issuers may negotiate termination fees and rights of first refusal, with specified conditions; (2) exempt from the filing requirements exchange-traded funds formed as grantor or statutory trusts; and (3) codify the electronic filing requirement. SEC Release No. 34-72114.
FINRA Revises the Product and Problem Codes for Reporting Customer Complaints
On May 7th, the Financial Industry Regulatory Authority announced that beginning October 1, 2014, firms must select revised and new product and problem codes when: (1) reporting information regarding written customer complaints alleging theft or misappropriation of funds or securities, or forgery; (2) reporting quarterly statistical and summary information regarding written customer complaints; and (3) completing the online form to file copies of required documents.
For purposes of reporting statistical and summary information regarding written customer complaints, the first quarterly report using the revised and new codes is due by January 15, 2015. FINRA Regulatory Notice 14-20.
ICE Clear Credit
Liquidity Thresholds Updated
On May 7th, the SEC approved ICE Clear Credit’s proposed updates to its liquidity thresholds for Euro denominated products. Under the proposed changes, ICC will require the first 65 percent of Clearing Participant Non-Client Initial Margin and Guaranty Fund Liquidity Requirements to be satisfied with collateral in the currency of the underlying instrument. SEC Release No. 34-72116.
Update to Valuation Policy Proposed
On May 2nd, the SEC provided notice of ICE Clear Credit’s filing of proposed updates to its policy regarding the valuation of maturing U.S. Treasury securities deposited to satisfy margin and guaranty fund requirements. Under the proposal, ICC will reduce the collateral valuation of maturing securities to $0 two business days prior to maturity. This timing allows for collection of additional margin or guaranty fund, if required, 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. Comments should be submitted on or before May 29, 2014. SEC Release No. 34-72083.
International Securities Exchange
Longer Period Designated to Consider Market Maker Risk Mitigation Proposal
On May 7th, the SEC designated June 24, 2014 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding the International Securities Exchange’s and ISE Gemini’s individually proposed rule changes to amend their respective rules to mitigate market maker risk by adopting an Exchange-provided risk management functionality.
Municipal Securities Rulemaking Board
Proposed Consolidation of Fair-Pricing Rules is Approved
On May 8th, the SEC granted accelerated approval to the Municipal Securities Rulemaking Board’s proposed codification of the substance of existing fair-pricing obligations of brokers, dealers, and municipal securities dealers and the further streamlining of the MSRB’s Rule Book by consolidating Rules G-18 and G-30 into a single fair-pricing rule, and consolidating the existing interpretive guidance under Rules G-17 and G-309 and codifying that guidance in the same rule. SEC Release No. 34-72129.
NASDAQ OMX Group
Amendments to Priority of Trade Rules Proposed
On May 7th, the SEC provided notice of NASDAQ OMX PHLX’s filing of proposed amendments to Rule 1014, Commentary .05(c)(ii), to afford priority in open outcry trading to in-crowd participants over out-of-crowd Streaming Quote Traders, Remote Specialists, and Remote Streaming Quote Traders, and over out-of-crowd broker-dealer limit orders on the limit order book (but not over public customer orders) in crossing, facilitation and solicited orders, regardless of order size. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of May 12. SEC Release No. 34-72119.
On May 8th, Bloomberg reported the New York Stock Exchange will eliminate certain order types. Curbing Orders.
Disapproval Proceedings Instituted for Priority of Bids Proposal
On May 2nd, the SEC instituted disapproval proceedings regarding NYSE Arca’s proposed amendment of its rules governing the priority of bids and offers on its Consolidated Book which would revise the order of priority in open outcry to afford priority to bids and offers represented by Market Makers and Floor Brokers over certain equal-priced bids and offers of non-customers on the Consolidated Book during the execution of an order in open outcry on the Floor of the Exchange. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of May 12. Rebuttal comments should be submitted 35 days after publication. SEC Release No. 34-72081.