U.S. Financial Industry Developments

SEC Adopts Rules to Enhance Transparency and Oversight of Alternative Trading Systems

On July 18, 2018, the Securities and Exchange Commission ("SEC") voted to adopt amendments to Regulation ATS to enhance operational transparency and regulatory oversight of alternative trading systems ("ATSs") that trade stocks listed on a national securities exchange.

Certain ATSs will be required to file detailed public disclosures on new Form ATS-N. According to the SEC: "these disclosures are designed to allow market participants to assess potential conflicts of interest and risks of information leakage arising from the ATS-related activities of the ATS's broker-dealer operator and its affiliates." Secondarily, the disclosures are intended to inform market participants about how the ATS operates, including order types and market data used on the ATS, fees, the ATS's execution and priority procedures, and any procedures to segment orders on the ATS.

According to the Fact Sheet published with its Press Release, the SEC stated:

The enhanced disclosures are also designed to enable market participants to compare an NMS Stock ATS to other trading venues and better evaluate the ATS as a potential destination for their orders.

Specifically, Form ATS-N will require an NMS Stock ATS to disclose information regarding:

• Information about its broker-dealer operator, including identifying information and ownership.
• ATS-related activities of its broker-dealer operator, and the broker-dealer operator's affiliates.
• The manner of operations of the NMS Stock ATS.

The amendments will be published on the Commission's website and in the Federal Register and will become effective 60 days from the date of publication in the Federal Register. An NMS Stock ATS that is operating pursuant to an initial operation report on Form ATS as of January 7, 2019 will be required to file a Form ATS-N no earlier than January 7, 2019 and no later than February 8, 2019. As of January 7, 2019, an entity seeking to operate as an NMS Stock ATS will be required to file a Form ATS-N.

SEC Adopts Final Rules and Solicits Public Comments on Ways to Modernize Offerings Pursuant to Compensatory Arrangements

On July 18, 2018, the SEC issued final rules to amend Rule 701, increasing from $5 million to $10 million the threshold in excess of which the issuer is required to deliver additional disclosures to investors. Release.

European Financial Industry Developments

European Commission Publishes Memo on Preparing for Brexit

The communication, published on July 19, 2018, points out that citizens, businesses, state bodies and others will be affected by Brexit and that a joint effort from all parties is required in order to be fully prepared.

The communication warns to prepare for two main scenarios:

• If the Withdrawal Agreement is ratified before March 30, 2019, EU law will stop applying to the UK after the agreed transition period of 21 months, that is on January 1, 2021.
• If the Withdrawal Agreement is not ratified before March 30, 2019, there will be no transition period and EU law will stop applying to the UK on March 30, 2019.

There will be consequences for many industries and the Commission has published more detailed preparedness notices on a sector-by-sector basis. These notices can be found here.

In terms of next steps, the Commission will ask the European Parliament and the European Council to prioritize the adoption of its Brexit proposals, so that they will be in force by the withdrawal date.

There is another Brexit meeting on October 18, 2018, after which the European Council will review the situation again.

Provision of Microcredit in Europe: Commission to Update European Good Code of Conduct

The European Commission (Directorate-General for Employment, Social Affairs and Inclusion) published a press release informing readers that it is updating the European good code of conduct for microcredit provision. The publication can he found here.

Originally launched in 2011, the code's aim was to provide a common set of standards relating to management, governance, risk management, reporting and consumer and investor relations for the EU microfinance sector.

The purpose of the update is to reflect market changes and the diversity of the microfinance sector. The updates are expected to be in place over the next 12 months.

Benchmarks Regulation Q&As Updated by ESMA

On July 17, 2018, The European Securities and Markets Authority ("ESMA") published an updated version of its Q&As on the implementation of the Regulation on indices employed in financial instruments and financial contracts or to measure the performance of investment funds ((EU) 2016/1011) (Benchmarks Regulation or BMR) (ESMA70-145-11, version 8).

Two key amendments include the definitions of calculation agent and regulated data benchmark.

The Q&As were first published by ESMA in July 2017 and were previously updated in May 2018.