Chicago Board Options Exchange
Login Fee Proposal Withdrawn
On May 28th, the SEC announced that the Chicago Board Options Exchange has withdrawn its proposed rule change to adopt a fee of $50 per month per login ID for off-floor PULSe Workstation users that elect to access a Complex Order Book Feed. SEC Release No. 34-72267.
Proposed Audit Trail Enhancement Approved
On May 22nd, the SEC approved the Chicago Board Options Exchange’s proposed rule change to enhance the Exchange’s audit trail. The rule change requires Floor Brokers and PAR Officials to electronically capture, by pressing a “Represent Button” on their trading device, the time at which they initially verbally present orders in the Exchange’s trading crowd. The Represent Button will be located on PAR workstations and other Exchange-approved devices used by Floor Brokers. SEC Release No. 34-72230.
Financial Industry Regulatory Authority
FINRA Investor Alert
On May 28th, the Financial Industry Regulatory Authority issued an investor alert called “High-Yield CDs: Red Flags That Signal a Scam” warning investors to be wary of promotions touting certificates of deposit that promise interest rates that are substantially higher than current averages. FINRA Press Release.
Supplement to the Security Futures Risk Disclosure Statement
On May 23rd, the Financial Industry Regulatory Authority released the April 2014 Supplement to the October 2002 Security Futures Risk Disclosure Statement. The Supplement adds new disclosure to accommodate proposed changes by OneChicago, LLC, to list a product with a physical delivery settlement cycle shorter than three business days. The implementation date of the Supplement is June 23, 2014. FINRA Regulatory Notice 14-24.
Disapproval Proceedings Instituted Regarding Arbitration Proposal
On May 20th, the SEC instituted approval or disapproval proceedings regarding the Financial Industry Regulatory Authority’s proposed amendment of Rule 12104 of the Customer Code and Rule 13104 of the Industry Code to broaden arbitrators’ authority to make referrals during an arbitration proceeding. Comments should be submitted on or before June 26, 2014. Rebuttal comments should be submitted on or before July 11, 2014. SEC Release No. 34-72196.
Disapproval Proceedings Instituted Regarding Per Share Estimated Valuations
On May 20th, the SEC instituted approval or disapproval proceedings regarding the Financial Industry Regulatory Authority’s proposed amendment of provisions in the NASD and FINRA rulebooks addressing per share estimated valuations for unlisted direct participation program and real estate investment trust securities. Comments should be submitted on or before July 11, 2014. SEC Release No. 34- 72193.
FINRA Clarifies Reporting Requirements for Hybrid Securities
On May 16th, the Financial Industry Regulatory Authority issued an interpretation clarifying how trades in certain securities that have both debt- and equity-like features (hybrid securities) must be reported to FINRA. The SEC has approved an interpretation regarding the appropriate trade reporting facility to which firms should report transactions in the following three types of hybrid securities: (1) unlisted depositary shares having a liquidation preference of $1,000 or more; (2) unlisted non-convertible, preferred securities having a liquidation preference of $1,000 or more; and (3) unlisted capital trust securities (also referred to as trust preferred securities) (together, “covered hybrid securities”). In accordance with this interpretation, on June 16, 2014, firms will be required to report transactions in covered hybrid securities to the Trade Reporting and Compliance Engine. However, firms may request the set-up of a new hybrid security for trade reporting purposes in accordance with this interpretation prior to that date. FINRA Regulatory Notice 14-23.
NASDAQ OMX Group
Modification of Order Execution Algorithm Proposed
On May 23rd, the SEC provided notice of NASDAQ OMX PHLX’s filing of a proposal modifying the order execution algorithm for Phlx’s NASDAQ OMX PSX facility. Comments should be submitted on or before June 20, 2014. SEC Release No. 34-72250.
National Futures Association
NFA Votes to Reduce Assessment Fees
On May 28th, the National Futures Association announced that its Board of Directors approved a reduction in NFA’s assessment fees from $.02 per side (futures andoptions contracts) to $.01 per side. If approved by the CFTC, the reduction will become effective on October 1, 2014. NFA Notice I-14-12.
NFA to Assess Late Fee
On May 19th, the National Futures Association announced that effective June 1, 2014, it will assess a $1,000 fee when a firm or individual fails to disclose a disciplinary matter on a registration application or fails to promptly update an existing registration record to disclose a new disciplinary matter. NFA Notice to Members I-14-11.
Longer Period Designated to Consider Insider Trading Proposal
On May 21st, the SEC designated July 3, 2014 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding the New York Stock Exchange’s and NYSE MKT’s individually proposed rules changes that would adopt principles-based approaches to prohibit the misuse of material non-public information.
Longer Period Designated to Consider Proposed Liquidity Pilot
On May 21st, the SEC designated July 25, 2014 as the date by which it will approve or disapprove the New York Stock Exchange’s and NYSE MKT’s individually proposed rule changes that would establish an Institutional Liquidity Program on a pilot basis. SEC Release No. 34-72205.
Options Clearing Corporation
Change in Acceptable Margin Assets Approved
On May 21st, the SEC approved the Options Clearing Corporation’s proposed elimination of preferred stock and corporate bonds as acceptable forms of margin assets. SEC Release No. 34-72206.