SEC Release No. 34-86175 Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital and Segregation Requirements for Broker-Dealers
In accordance with the Dodd-Frank Act, the SEC, pursuant to the Securities Exchange Act of 1934 (“Exchange Act”), is adopting capital and margin requirements for security-based swap dealers (“SBSDs”) and major security-based swap participants (“MSBSPs”), segregation requirements for SBSDs, and notification requirements with respect to segregation for SBSDs and MSBSPs. The Commission also is increasing the minimum net capital requirements for broker-dealers authorized to use internal models to compute net capital (“A NC broker-dealers”), and prescribing certain capital and segregation requirements for broker-dealers that are not SBSDs to the extent they engage in security-basedswap and swap activity. The Commission also is making substituted compliance available with respect to capital and margin requirements under Section 15F of the Exchange Act and the rules thereunder and adopting a rule that specifies when a foreign SBSD or foreign MSBSP need not comply with the segregation requirements of Section 3E of the Exchange Act and the rules thereunder.
SR-NYSE-2019-22 Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2, to Amend NYSE Rule 7.31 to Add a New Order Type, Capital Commitment Order, Modify the Market Order and the Last Sale Peg Modifier, and Make Related Changes to NYSE Rules 7.16, 7.18, 7.34, 7.36, and 7.37
The Exchange proposes to amend Rule 7.31 (Orders and Modifiers) to add a new order type, Capital Commitment Order, and make related changes to Rules 7.16, 7.18, 7.34, 7.36, and 7.37. The Exchange proposes to further amend Rule 7.31 to specify that Market Orders and the Last Sale Peg Modifier would not be available to Designated Market Makers (“DMMs”). This Amendment No. 2 supersedes the original filing and Amendment No. 1 in its entirety.
Cboe RG19-022 Regulatory Division Contacts for Market Maker Quoting Issues and Late Withdrawals/Terminations
This circular was issued to inform Trading Permit Holders (“TPHs”) and Members registered as Market Makers of contact information for notifying the Regulatory Division when a Market Maker experiences quoting issues and when a Market Maker changes its appointment selections or withdraws or terminates its appointment or registration in a given security after the applicable cutoff time.
SEC Release NO. 33-10648 Auditor Independence With Respect to Certain Loans or Debtor-Creditor Relationships
The SECis adopting amendments to its auditor independence rules to refocus the analysis that must be conducted to determine whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client at any time during an audit or professional engagement period. The amendments focus the analysis on beneficial ownership rather than on both record and beneficial ownership; replace the existing 10 percent bright-line shareholder ownership test with a “significant influence” test; add a “known through reasonable inquiry” standard with respect to identifying beneficial owners of the audit client’s equity securities; and exclude from the definition of “audit client,” for a fund under audit, any other funds, that otherwise would be considered affiliates of the audit client under the rules for certain lending relationships. The amendments will more effectively identify debtor-creditor relationships that could impair an auditor’s objectivity and impartiality, as opposed to certain more attenuated relationships that are unlikely to pose such threats, and thus will focus the analysis on those borrowing relationships that are important to investors.
The Commission is adopting an amendment to an exemptive provision in the broker-dealer annual reporting rule under the Securities Exchange Act of 1934 (“Exchange Act”). The exemption provides that a broker-dealer is not required to engage an independent public accountant to certify the broker-dealer’s annual reports filed with the Commission if, among other things, the securities business of the broker-dealer has been limited to acting as broker (agent) for a single issuer in soliciting subscriptions for securities of that issuer.
Pursuant to industry regulations, the Exchanges are each required to establish standards for the designation of those participants that the respective Exchange reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of the Exchange’s business continuity and disaster recovery plans and designate participants pursuant to those standards. Designated Members and Designated Trading Permit Holders (“Designated Participants”) are required to participate in testing of the respective Exchange’s business continuity and disaster recovery plans. Periodically the Exchanges announce mandatory testing dates. The next mandatory test is October 26, 2019.
The SEC is adopting a new rule, establishing a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities. Regulation Best Interest enhances the brokerdealer standard of conduct beyond existing suitability obligations, and aligns the standard of conduct with retail customers’ reasonable expectations by requiring broker-dealers, among other things, to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where we have determined that disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict. The standard of conduct established by Regulation Best Interest cannot be satisfied through disclosure alone. The standard of conduct draws from key principles underlying fiduciary obligations, including those that apply to investment advisers under the Investment Advisers Act of 1940. Importantly, regardless of whether a retail investor chooses a broker-dealer or an investment adviser (or both), the retail investor will be entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that is in the best interest of the retail investor and that does not place the interests of the firm or the financial professional ahead of the interests of the retail investor.
Cboe Exchange, Inc. is issuing this Regulatory Circular to inform Trading Permit Holders that the Exchanges will be discontinuing access to Market Replay as outlined in further in the Regulatory Circular.
SEC File No. SR-NYSE-2019-28 Notice of Filing of Proposed Rule Change Amending Section 303A.08 of the Listed Company Manual Relating to Shareholder Approval of Equity Compensation Plans
The Exchange proposes to amend Section 303A.08 of the Listed Company Manual to clarify the circumstances under which certain sales of a listed company’s securities will not be deemed to be equity compensation for purposes of that rule and to make a clarifying change in Section 312.04. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room
SEC File No. File No. File No. SR-NYSE-2019-26 Notice of Filing and Immediate Effectiveness of Proposed Rule Change of New Rule 7.44 to Operate Its Retail Liquidity Program on Pillar, the Exchange’s New Technology Trading Platform
The Exchange proposes new Rule 7.44 to operate its Retail Liquidity Program on Pillar, the Exchange’s new technology trading platform. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room.
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