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On August 13, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 18-25 to remind Alternative Trading Systems (ATS) to evaluate their supervisory systems to ensure compliance with their supervision obligations, including, without limitation, with respect to business continuity, recordkeeping, Regulation ATS, Regulation NMS, Regulation SHO and the SEC’s Market Access Rule, to the extent applicable. As a general matter, consistent with existing supervision obligations, FINRA expects that an ATS’s supervisory system be reasonably designed…
On July 26, the Securities and Exchange Commission disapproved a Bats BZX Exchange proposed rule change that would have permitted the listing and trading of shares of the Winklevoss Bitcoin Trust (Trust) on BZX. This is the SEC’s second disapproval of the proposed rule change as it has previously disapproved the exchange’s original proposal in March 2017. Notably, Commissioner Hester Peirce dissented from the SEC’s most recent disapproval.…
On July 18, the Securities and Exchange Commission adopted new Form ATS-N and amendments to Regulation ATS and Exchange Act Rule 3a1-1. The new requirements are designed to enhance transparency of alternative trading systems (ATSs) that trade stocks listed on a national securities exchange (NMS Stock ATSs) by requiring them to publicly disclose detailed information about their operations, including order types and market data used on the ATS, fees, the ATS’s execution and priority procedures,…
On July 6, the Financial Industry Regulatory Authority published Regulatory Notice 18-20, which encourages member firms to promptly notify FINRA if the firm or any of its associated persons or affiliates engages or intends to engage in any activities involving digital assets, such as cryptocurrencies and other virtual coins and tokens. Digital assets activities include those relating to digital assets that are not securities and the activities under Rule 3270 (Outside Business Activities of Registered…
On July 16, the Securities Exchange Commission will host a meeting of the Fixed Income Market Structure Advisory Committee. The agenda includes the following items for discussion: Pre-Trade Transparency Under MiFID II Current State of Pre-Trade Transparency in the US Corporate Bond Market Current State of Pre-Trade Transparency in the US Municipal Securities Market Electronic Trading Venue Regulation—Draft Recommendation ETFs and Bond Funds Subcommittee Update The meeting is open to the public and will be…
On July 18, the Securities Exchange Commission will host an open meeting to discuss various regulatory proposals. Among other agenda items, the meeting will cover whether the SEC should adopt amendments to Rule 3a1-1 and Regulation ATS and new Form ATS-N under the Securities Exchange Act of 1934 related to certain alternative trading systems (ATSs). The SEC originally proposed creating Form ATS-N in 2015. If adopted, Form ATS-N would require NMS Stock ATSs to publicly…
On July 5, the Financial Industry Regulatory Authority announced an enhanced disclosure review process of individuals seeking registration with a brokerage firm. As of July 9, FINRA intends to conduct a public records review of an individual after a Form U4 is submitted for such individual’s registration. FINRA will contact the applicant’s firm within 15 calendar days of the submission of the application if FINRA’s review indicates that the Form U4 information is incomplete or…
On June 28, the Securities and Exchange Commission voted to propose a new rule and set of form amendments related to the approval process for certain exchange-traded funds (ETFs) that operate as open-ended funds (Proposal). Among other things, the Proposal calls for the creation of a new rule 6c-11 of the Investment Company Act of 1940 (Investment Company Act) that would allow ETFs that satisfy certain conditions to operate within the scope of the Investment…
On May 22, Brett Redfearn, the Director of the Securities and Exchange Commission’s Division of Trading and Markets spoke at the Financial Industry Regulatory Authority’s Annual Conference regarding the newly proposed Regulation Best Interest. (For a more complete discussion of Regulation Best Interest, please refer to Katten’s “SEC Proposes Fiduciary Rule for Broker-Dealers” advisory, available here.) Director Redfearn noted that he views Regulation Best Interest as a “significant change from the status quo for…
The Financial Industry Regulatory Authority (FINRA) filed amendments to Rule 3310 to conform to the Financial Crimes Enforcement Network’s (FinCEN’s) customer due diligence requirements. Specifically, the amendments to Rule 3310 require each member to include in its anti-money laundering program appropriate procedures for conducting ongoing customer due diligence, including but not limited to, “[u]nderstanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile” and “[c]onducting ongoing monitoring to…