The Financial Report - Volume 2, No. 21 • November 2013 (Global)

by DLA Piper



Discussion and Analysis

News from the Americas

News from Asia and the Pacific

News from Europe

Global Regulators

US Securities and Exchange Commission Developments

US Commodity Futures Trading Commission Developments

US Banking Agency Developments

US Exchanges and Self-Regulatory Organizations

Discussion and Analysis

This week, the Oxford Dictionaries chose “selfie” as the word of the year. It beat out a number of other relatively new Internet and social-media related terms, including “bitcoin.”

In an interesting coincidence, US law-enforcement and regulatory authorities appeared earlier this week at the first-ever congressional hearing on virtual currencies. The focus of the hearing was on “bitcoin,” the peer-to-peer digital currency introduced in 2008. Bitcoin is not backed by any central bank and can be traded on a number of exchanges, swapped in private transactions or used to buy a variety of consumer goods. There are approximately 12 million bitcoins in circulation today. Approximately US$8 billion in bitcoin transactions took place in the 12-month period ending in October 2013.

Following the positive remarks of some US officials in the wake of the hearing, the price of Bitcoin topped US$700 on the Tokyo-based virtual Mt. Gox exchange. Bitcoin traded at about US $13 in January.

A senior representative of the Department of Justice stated at the hearing that virtual currency systems “offer legitimate financial services and have the potential to promote more efficient global commerce.” Outgoing Federal Reserve Chairman Ben Bernanke, who did not attend the Senate hearing, stated in a letter to the hearing that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.”

But what is bitcoin? Who can and should regulate virtual currencies? And how should they be regulated? There is no doubt that innovation always outpaces regulation. Therefore, US regulators need to scramble to understand the legitimate and potentially illicit uses of virtual currencies. For example, one of the appealing aspects of virtual currencies is that transaction costs are generally lower than those of credit or debit cards. However the anonymity of virtual currencies may appeal to criminals and poses a challenge for US law enforcement authorities.

In a letter to the Senate hearing, SEC Chairman Mary Jo White said that bitcoin likely would be a security and should be regulated as such. That may not be so clear, however. Traditional currencies are not regulated as securities. Moreover, virtual currencies don’t belong to any nation or central bank and few, if any, countries have attempted to develop or apply law or regulation to digital money. In a article on Tuesday, reporter Quentin Hardy quotes an ex-pat American user of bitcoin: “It [Bitcoin] opened my eyes to the fact that the US isn’t as influential as I thought. Bitcoin is a currency, a commodity and an accountancy built by developers that is completely decentralized. It’s fundamentally better.”

Some commentators fear that if the US attempts to regulate virtual currencies, it will push businesses outside the country to jurisdictions with little to no regulation. A senior representative of FinCEN, however, apparently disagreed. She said that as virtual currency evolves, regulation in the US and abroad will catch up because it will have to. The goal will be to mitigate anti-money laundering risks and risks of illicit activity while minimizing burdens, she added.

It is no wonder that “selfie” is the “word of the year” for 2013. Everybody knows what a selfie is. But just wait ’til next year. “Bitcoin” may just be the word of the year for 2014.

News from the Americas

Implementing the Volcker rule. According to CNBC, the Federal Reserve Board may delay by at least one year the implementation date for the Dodd-Frank Act’s Volcker rule, which prohibits depository banks from engaging in proprietary trading (11/17/2013) Delay. DealBook discussed some of the issues that the regulators charged with implementing the rule must resolve. It noted that a final version is likely to include a provision requiring a bank’s CEO to attest that the firm is not engaged in proprietary trading. (11/7/2013). Issues. Reuters reported that CFTC Chairman Gary Gensler will soon circulate among his fellow Commissioners draft rules implementing the Volcker rule. (11/18/2013)

SEDAR transition delay. The Canadian Securities Administrators announced a delay in the implementation date of the change-over for the hosting, operation and maintenance of the System for Electronic Documents Analysis and Retrieval (SEDAR), the System for Electronic Disclosure by Insiders (SEDI) and the National Registration Database (NRD) to CGI Information Systems and Management Consultants Inc. The previously communicated transition date was December 2, 2013. (11/14/2013) CSA press release.

Canada’s provincial regulators publish derivatives rules. The Ontario Securities Commission published “OSC Rule 91-506 Derivatives: Product Determination” and “OSC Rule 91-507 Trade Repositories (TR) and Derivatives Data Reporting (DR).” The TR and DR rules take effect December 31, 2013, and the reporting requirements will begin July 2, 2014. The Autorité des marchés financiers and the Manitoba Securities Commission also published harmonized province-specific rules. (11/14/2013) OSC press release.

Canada OSC roundtable on proxy voting. The Ontario Securities Commission will hold a roundtable on January 29, 2014, to explore the issues identified in CSA Consultation Paper and Request for Comment 54-401, “Review of the Proxy Voting Infrastructure.” (11/5/2013) OSC press release.

Canada OSC compliance expectations. The Ontario Securities Commission published an Annual Summary Report which sets out expectations for firms and individuals directly regulated by the OSC (including exempt market dealers, portfolio managers and investment fund managers). The report is designed to enhance the understanding by firms and individuals of their obligations under Ontario securities law. (11/7/2013) OSC press release.

News from Asia and the Pacific

Hong Kong surveys OTC derivatives industry. The Hong Kong Securities and Futures Commission issued a survey to corporate participants in the Hong Kong over-the-counter derivatives market. The survey is meant to assist in the smooth implementation of the new regulatory regime for that market. The survey will help the SFC to ascertain the number of market participants who may need to be licensed or registered under the new regime. To this end, the SFC also issued a circular which describes the proposed changes to the law through which the new regime would be established. Responses should be submitted by December 20, 2013. (11/19/2013) SFC press release.

China’s financial reform roadmap. The text of the Communist Party of China Central Committee’s decision on major issues concerning deepening reforms has been published. Among other things, China will allow qualified private capital to set up small- and medium-sized banks; non-state-owned capital will be allowed to take equity stakes in projects featuring investment by state-owned capital, and employees of multi-ownership enterprises will be able to hold shares in their companies; and more state-owned assets will be channeled into public welfare state-owned enterprises. (11/15/2013) Bloomberg summarized the remarks of Xiao Gang, head of the China Securities Regulatory Commission, concerning the government’s new policy towards initial public offerings. China will adopt an IPO registration system in lieu of its current approval process. (11/19/2013) IPO process.

ASIC warning to real estate industry. The Australian Securities & Investments Commission warned the real estate industry that agents recommending investors use a self-managed superannuation fund to invest in property must ensure that they are appropriately licensed to provide the advice. ASIC is working with the Real Estate Institute of Australia to ensure that real estate agents understand their legal obligations. (11/6/2013) ASIC press release.

News from Europe

Bank of England financial stability paper. The Bank of England published a paper on sovereign debt restructuring. For reasons of equity and efficiency, private creditors should play a greater role in risk-sharing and helping to resolve sovereign debt crises. The paper proposes the introduction of two complementary types of state-continent bonds: “sovereign cocos” and “GDP-linked bonds.” (11/19/2013) Bank of England press release.

ESMA standards for non-EU derivatives transactions. The European Securities and Markets Authority issued final draft regulatory technical standards (RTS) related to derivative transactions by non-European Union (EU) counterparties. The RTS implement provisions of the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR). The EMIR provisions regarding central clearing and risk mitigation techniques also apply to those OTC derivatives entered into by two non-EU counterparties which have a direct, substantial and foreseeable impact on EU financial markets. ESMA’s draft RTS clarify that OTC derivative contracts entered into by two counterparties established in one or more non-EU countries, for which a decision on equivalence of the jurisdiction’s regulatory regime has not been adopted, will be subject to EMIR where certain conditions are met. (11/18/2013) ESMA notice.

ESMA reviews financial reporting. The European Securities and Markets Authority published a review of the comparability and quality of disclosures in 2012 IFRS financial statements of listed financial institutions. The review makes recommendations aimed at enhancing the transparency of financial statements through the improvement of disclosures in certain key areas including credit risk and impact of forbearance practices; liquidity and funding risk; asset encumbrance; and fair value measurement of financial instruments. (11/18/2013) ESMA notice.

UK FCA proposes amendments to the Recognized Investment Exchanges sourcebook. The UK’s Financial Conduct Authority opened a consultation on changes to its Recognized Investment Exchanges sourcebook. The proposal would make clear how the FCA will take competition considerations into account when supervising Recognized Investment Exchanges and Recognized Overseas Investment Exchanges. Comments should be submitted by January 31, 2014. (11/18/2013) FCA press release.

UK systemic risk survey. The Bank of England published the results of its systemic risk survey which was conducted between September 23 and October 24, 2013. The survey quantifies and tracks market participants’ views of risks to, and their confidence in, the UK financial system. (11/18/2013)

Euro zone bailout. According to Reuters, finance ministers from the European Union have agreed that euro zone bailout funds may be used to support failing banks, if necessary. (11/15/2013) Agreement.

CCP default resources. The Bank of England published a paper on the adequacy of central counterparties’ default resources. The paper proposes a methodology in which daily data on a CCP’s member exposures would be used to form a top-down statistical model of the risk arising from the CCP’s exposures to its members. (11/15/2013) Bank of England press release.

ESMA risk dashboard. The European Securities and Markets Authority published its risk dashboard for the third quarter of 2013. (11/15/2013) ESMA notice.

Trilogue agreement on Omnibus II. EC Commissioner Michel Barnier discussed the November 13, 2013 trilogue agreement on draft Omnibus II measures implementing Solvency II. Omnibus II would create a risk-based regulatory and supervisory framework for the insurance sector, including measures to clarify the treatment of insurance products with long-term guarantees. (11/14/2013) Barnier Memo. summarized the agreement’s provisions (11/14/2013) Summary.

ESMA consults on Market Abuse Regulation. The European Securities and Markets Authority published a discussion paper setting out the measures it will have to develop for the new Market Abuse Regulation. Comments should be submitted by January 27, 2014. (11/14/2013) ESMA notice.

ESMA clarifies shareholder cooperation in takeover situations. The European Securities and Markets Authority published a statement on practices governed by the Takeover Bid Directive (TBD), focused on shareholder cooperation issues relating to acting in concert and the appointment of board members. The statement contains a White List of activities on which shareholders can cooperate without the presumption of acting in concert. It also contains information on how shareholders may cooperate in order to secure board member appointments by setting out factors that national authorities may take into account when considering whether shareholders are acting in concert. (11/12/2013) ESMA notice.

EBA peer review on the implementation of stress testing. The European Banking Authority published the peer review on the implementation of the EBA guidelines on stress testing. The peer review assessed the effectiveness of the supervisory activities related to the review of credit institutions’ own stress testing frameworks across the EU, as well as the implementation of related provisions by competent authorities. The report found that National Competent Authorities largely comply with the assessed guidelines. (11/12/2013) EBA press release.

ESMA enforcement priorities. The European Securities and Markets Authority has published its European Common Enforcement Priorities for 2013. These Priorities are to be used by European Economic Area national authorities in their assessment of listed companies’ 2013 financial statements. The Priorities identified refer to the application of IFRS in relation to impairment of non-financial assets; measurement and disclosure of post-employment benefit obligations; fair value measurement and disclosure; disclosures related to significant accounting policies, judgments and estimates; and measurement of financial instruments and disclosure of related risks. (11/11/2013) ESMA notice.

Bank of England financial stability paper. The Bank of England published a paper analyzing the structure and dynamics of the UK single-name credit default swap market. (11/8/2013) Bank of England press release.

UK FCA statements on commodity markets. The UK Financial Conduct Authority issued two statements concerning the commodity markets. The first concerns the London Metal Exchange (LME). The FCA expects the LME to ensure that approved warehouses provide effective and efficient services for the receipt, holding and delivery of metal related to the trading of LME contracts, to support the LME in meeting its regulatory obligations as a recognized investment exchange. (11/7/2013) The second concerns the FCA’s review with Ofgem of allegations of manipulation of the gas market on September 28, 2012. The two agencies did not find evidence of market manipulation. (11/7/2013)

Four trade repositories approved. The European Securities and Markets Authority approved the registrations of four trade repositories under the European Market Infrastructure Regulation. They are: DTCC Derivatives Repository Ltd.; Krajowy Depozyt Papierów Wartosciowych S.A.; Regis-TR S.A; and UnaVista Ltd. (11/7/2013) ESMA notice.

European regulators proposal concerning credit rating reliance. The Joint Committee of the European Supervisory Authorities launched a public consultation on the removal of mechanistic references to credit ratings in their guidelines. Comments should be submitted by December 5, 2013. (11/7/2013) EBA press release.

ESMA and EBA consult on complaint handling. The European Securities and Markets Authority and the European Banking Authority jointly launched a consultation on guidelines for complaints handling in the securities and markets sectors. The proposed guidelines would build on the existing guidelines on complaint handling by insurance undertakings, which were published by the European Insurance and Occupational Pensions Authority in 2012. Comments should be submitted by February 7, 2014. (11/6/2013) ESMA notice.

Global Regulators

FSB risk management papers. The Financial Stability Board published two papers on risk management practices at financial institutions: “Principles for an Effective Risk Appetite Framework” and “Guidance on Supervisory Interaction with Financial Institutions on Risk Culture.” (11/18/2013) FSB press release.

FSB reports on global shadow banking. The Financial Stability Board published its third annual “Global Shadow Banking Monitoring Report.” The report discusses the growth, size and assets of non-bank financial intermediaries. (11/14/2013) FSB press release.

US Securities and Exchange Commission Developments

Requests for Comment

Proposed auditing standard. The SEC provided notice of the PCAOB’s submission of proposed Auditing Standard No. 17, Auditing Supplemental Information Accompanying Audited Financial Statements, to its interim auditing standards. Comments should be submitted by December 6. (11/8/2013) SEC Release No. 34-70843.

Proposed attestation standards. The SEC provided notice of the PCAOB’s submission of proposed Attestation Standard No. 1, Examination Engagements Regarding Compliance Reports of Brokers and Dealers, and Attestation Standard No. 2, Review Engagements Regarding Exemption Reports of Brokers and Dealers, to the PCAOB standards. Comments on either proposal should be submitted by December 6. (11/8/2013) SEC Release No. 34-70842.

Selected Enforcement Actions

SEC rejects the “everyone is doing it” defense. The SEC affirmed the Financial Industry Regulatory Authority’s findings of violations and sanctions against Robert Conway and Kakit Ng. FINRA found that Conway and Ng engaged in unethical conduct, in violation of NASD Conduct Rule 2110, by using deceptive market timing practices and executing late trades in mutual fund shares. In its opinion sustaining FINRA’s findings, the Commission found that Conway and Ng had actual notice that their activities were improper. Discounting the respondents’ contention that their conduct was consistent with industry norms, the Commission held that “it is no defense that others in the industry may have been operating in a similarly illegal or improper manner.” (11/7/2013) In the Matter of the Application of Robert Conway, SEC Release No. 34-70833.

SEC charges audit firm and partners with audit failures. The SEC instituted settled administrative proceedings against an audit firm, its founder, two other partners, and an audit manager for their roles in the failed audits of three China-based companies publicly traded in the US. An SEC investigation found that Sherb & Co. LLP and its auditors falsely represented in audit reports that they had conducted the audits in accordance with US auditing standards when in fact they were riddled with failures and improper professional conduct. One of the companies audited, China Sky One Medical Inc., has since been charged by the SEC with fraud. To settle the SEC’s charges, the firm and the four auditors agreed to be barred from practicing as accountants on behalf of any publicly traded company or other entity regulated by the SEC. The firm agreed to pay a US$75,000 penalty. (11/7/2013) SEC press release.

Other Developments

SEC reconsiders “accredited investor” definition. The Wall Street Journal summarized a letter SEC Chairman Mary Jo White sent to Congress concerning the Commission’s plans to revise the accredited investor rules. Among other things, the agency is considering whether to amend the rule to allow investors with certain higher-education degrees to participate in private offerings even if they do not meet income thresholds. (11/18/2013) Definition.

Office of the Whistleblower’s annual report. The SEC’s Office of the Whistleblower published its 2013 Annual Report to Congress. For fiscal year 2013, the Office paid US$14 million to informants. The number of whistleblower tips and complaints increased from 3,001 in the 2012 fiscal year to 3,238 in the 2013 fiscal year.

SEC roundtable on proxy advisors. The SEC will host a roundtable discussion on December 5, 2013, to discuss the use of proxy advisory firm services by institutional investors and investment advisers. (11/5/2013) SEC press release.

Chairman White discusses trials. Mary Jo White, Chairman of the SEC, discussed the importance of trials. “If,” she noted, “a result of our change in settlement policy results in more trials, one clear winner will be the administration of justice, which will always fare best in the open for the public to see and to take stock of what a defendant did and what its government is doing. It also would make our lives as lawyers and judges more interesting and... even more exciting from time to time.” (11/14/2013) White speech.

Crowdfunding. The potential costs that a company may incur when it raises funds via the SEC’s new crowdfunding rules were discussed by the New York Times. (11/14/2013) Crowdfunding.

SIFMA’s objections to the municipal advisor rule. The Securities Industry and Financial Markets Association’s objections to the SEC’s municipal advisor registration rule were discussed by the Bond Buyer. (11/14/2013) Response.

Staff guidance. The SEC’s Division of Corporation Finance issued 11 new compliance and disclosure interpretations. New Questions 138.03 and 138.04 concern Rule 144A - Private resales of securities to institutions. New Questions 260.05 through 260.13 address Rule 506 - exemption for limited offers and sales without regard to dollar amount of offering. (11/13/2013) C&DI guidance page.

Commissioner Gallagher discusses market structure. SEC Commissioner Daniel Gallagher has called for the creation of a separate marketplace for the exclusive use of small and emerging companies. (11/6/2013) Gallagher speech.

US Commodity Futures Trading Commission Developments

New Final Rules

Ownership and control reports. The CFTC published new rules and related forms to enhance its identification of futures and swap market participants. The new rules require the electronic submission of trader identification and market participant data on amended Forms 102 and 40, and on new Form 71. The new and amended forms require the reporting of certain trading accounts active on reporting markets that are designated contract markets or swap execution facilities. The forms collect ownership and control information with respect to both position-based special accounts and trading accounts that meet specified volume-based reporting levels. The rules are effective February 18, 2014. The compliance date is August 15, 2014. (11/18/2013) 78 FR 69177.

DCO rules and international standards. The CFTC published new final rules for systemically important derivatives clearing organizations (SIDCOs). The rules, together with the existing derivatives clearing organizations rules, establish CFTC regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs) and would allow SIDCOs to continue to be Qualifying Central Counterparties for purposes of international bank capital standards. The final rules include substantive requirements relating to governance, financial resources, system safeguards, special default rules and procedures for uncovered losses or shortfalls, risk management, additional disclosure requirements, efficiency, and recovery and wind-down procedures. (11/15/2013) CFTC press release.

Proposed Rules and Requests for Comment

Exchange for related positions transactions. The CFTC seeks comment on a request from the Chicago Mercantile Exchange Inc., the Board of Trade of the City of Chicago, Inc., New York Mercantile Exchange, Inc., Commodity Exchange, Inc., and the Board of Trade of Kansas City, Missouri, Inc. for approval of amendments to existing Rule 538 of the Exchanges’ rulebooks and the issuance of CME Group Market Regulation Advisory Notice RA1311-5. The amendments would eliminate the use of transitory Exchange for Related Positions transactions (EFRPs) - except for transitory EFRPs in the Exchanges’ FX markets - wherein the execution of an EFRP is contingent upon the execution of another EFRP or related position transaction between the parties and where the transactions result in the offset of the related positions without the incurrence of market risk in the context of the related position transactions. Comments should be submitted by December 6, 2013. (11/6/2013) CFTC press release.

Aggregation of positions. The CFTC issued proposed modifications to its rules for aggregation under the position limits regime for futures and option contracts on nine agricultural commodities. Comments should be submitted by January 14, 2014. (11/5/2013)

Membership in registered futures association. The CFTC proposed amendments that would require all CFTC-registered introducing brokers, commodity pool operators, and commodity trading advisors to become and remain members of at least one registered futures association (RFA). Currently, the National Futures Association is the only RFA. Comments should be submitted by January 7, 2014. (11/5/2013) See also 78 FR 67985 (correcting comment deadline date) (11/13/2013)


SEF guidance. The CFTC’s Division of Market Oversight issued new guidance to swap execution facilities (SEFs) and applicants for registration as a SEF concerning certain Commission regulations. The guidance addresses six areas including a SEF’s use of proprietary data or personal information collected by the SEF from its market participants; consent to the jurisdiction of a SEF; registration requirements under CFTC Regulation 37.3; and member guarantees. In addition, the guidance reiterates the requirements for taking emergency actions and it clarifies certain SEF reporting obligations. (11/15/2013) CFTC press release.

Transaction-level swaps requirements. The CFTC’s Division of Swap Dealer and Intermediary Oversight responded to an inquiry from swap market participants and other interested parties on the applicability of Dodd-Frank Act transaction-level requirements to swaps between non-US swap dealers (SDs) (whether or not an affiliate of a US person) and non-US persons if the swap is arranged, negotiated, or executed by personnel or agents of the non-US SD located in the US. (11/14/2013) CFTC press release. Bloomberg reported the guidance has provoked an immediate negative response not only from industry, but from European regulators. Both believe that the guidance exposes more swaps trades to potential US regulation. (11/18/2013) Response.

Staff guidance on SEF impartial access. The CFTC’s Division of Clearing and Risk, Division of Market Oversight, and the Division of Swap Dealer and Intermediary Oversight issued guidance to swap execution facilities (SEFs) and applicants for registration as a SEF concerning certain CFTC regulations. The guidance addresses certain restrictions related to swaps executed or traded on or subject to the rules of a SEF that are intended to be cleared. In addition, the guidance addresses requirements placed on eligible contract participants for access to a SEF. (11/14/2013) CFTC press release.

Other Developments

Temporary SEF approved. The CFTC approved the application of LatAm SEF, LLC for temporary registration as a swap execution facility. (11/18/2013) CFTC press release.

Position limits debated. discussed the CFTC’s latest proposed position limits, noting the differences between the current rule and those previously proposed, and the concerns that many market participants continue to have. (11/18/2013) Position limits.

Regulatory relief. The CFTC’s Division of Swap Dealer and Intermediary Oversight issued a no-action letter relating to certain duties imposed on swap dealers (SDs) and major swap participants (MSPs) pursuant to the CFTC’s Business Conduct Standards with Counterparties (External BCS), as well as certain documentation requirements imposed on SDs and MSPs pursuant to Commission Regulation 23.504. The relief addresses the regulatory obligations of SDs and MSPs in the context of an “Intended-To-Be-Cleared Swap.” The letter supersedes Letter No. 13-33, and states that no person may rely upon the relief provided in Letter No. 13-33 after November 15, 2013. (11/15/2013) CFTC press release.

CFTC Chairman nominated. President Obama has nominated Treasury Department official Timothy Massad to succeed Gary Gensler as Chairman of the CFTC. (11/12/2013) See, e.g., DealBook.

US Banking Agency Developments

OCC guidance on independent consultants. The OCC published standards governing the use of independent consultants in enforcement actions involving significant violations of law, fraud, or harm to consumers. The standards describe the criteria that the OCC will use in determining whether the agency would require a national bank or federal savings association to retain a consultant, as well as the institution’s obligation to exercise due diligence to ensure the consultant has sufficient independence, capacity, resources, and expertise. (11/12/2013) OCC press release.

US Exchanges and Self-Regulatory Organizations

NFA request to CPOs operating registered investment companies utilizing wholly owned subsidiaries. The National Futures Association is requiring any commodity pool operator that has filed a claim of notice under CFTC No-Action Letter 13-51, which provides relief from certain reporting obligations under Part 4 of CFTC Regulations to certain wholly owned subsidiaries of registered investment companies, to notify NFA of the notice filing on or before December 31, 2013. (11/18/2013) NFA Notice I-13-36.

FINRA amends discovery guide. The Financial Industry Regulatory Authority announced that the SEC has approved proposed amendments to FINRA’s Discovery Guide for customer arbitration proceedings. The amended guide provides arbitrators with guidance on resolving electronic discovery disputes. The amendments are effective December 2, 2013. (11/15/2013) FINRA Regulatory Notice 13-40.

Futures customer insurance. CME Group, the Futures Industry Association, the Institute for Financial Markets and the National Futures Association have published a study on the economic feasibility of adopting an insurance regime for the futures industry. (11/15/2013) NFA press release.

FINRA enhances BrokerCheck. The Financial Industry Regulatory Authority released an enhanced version of BrokerCheck. The enhanced program will allow investors to more quickly access the professional background of investment professionals. (11/12/2013) FINRA press release.

SROs to address market infrastructure issues. The Financial Industry Regulatory Authority announced that the self-regulatory organizations for the equities and options markets have reached a general agreement concerning recommendations and implementation timetables to address market infrastructure issues. The details of the proposals will be presented in subsequent rule filings and NMS Plan Amendments and will be subject to public comment and SEC approval. (11/12/2013) FINRA press release.

OTC options proposal approved. The Financial Industry Regulatory Authority announced SEC approval of proposed amendments that treat over-the-counter options cleared by The Options Clearing Corporation as conventional options for purposes of FINRA Rule 2360 (Options) and as listed options for purposes of FINRA Rule 4210 (Margin Requirements). The amendments are effective immediately. (11/7/2013) FINRA Regulatory Notice 13-39.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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