On May 18, the CFTC and the SEC released preliminary findings in their review of the market events of May 6 in a report to the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues. Report.
Month: May 2010
Stock-by-Stock Circuit Breaker Rule Proposals
On May 18, in response to the market disruption of May 6, the national securities exchanges and FINRA proposed rules to pause trading in individual stocks for five minutes if the price moves 10% or more over the preceding five-minute period. Initially, the proposed rules would be in effect on a pilot basis through December 10 and would apply only to securities included in the S&P 500 Index. Comments are requested within 10 days of publication of the proposed rules in the Federal Register. FINRA. NYSE. NASDAQ. NYSE Amex LLC. BATS Exchange, Inc. Chicago Board Options Exchange. Chicago Stock Exchange. EDGA Exchange, Inc. EDGX Exchange. NASDAQ OMX BX, Inc. National Stock Exchange.
Rule 17g-5 Exemption for Non-U.S. Persons
On May 19, the SEC issued an exemptive order stating that an NRSRO is not required to comply with Rule 17g-5(a)(3) until December 2 with respect to credit ratings for structured finance transactions where: (i) the issuer of the structured finance product is a non-U.S. person, and (ii) the NRSRO has a reasonable basis to conclude that the structured finance product will be offered and sold upon issuance, and that any arranger will effect transactions of the structured finance product after issuance outside of the U.S. The SEC is also requesting comments on the application of Rule 17g-5(a)(3) to transactions outside of the U.S. SEC Exemptive Order.
Senate Approves Financial Regulatory Reform Bill
On May 20, the Senate approved its version of financial regulatory reform legislation with the passage of the “Wall Street Reform and Consumer Protection Act of 2009”. The next step will be for a joint committee to reconcile the Senate and House bills. Senate Bill.
Rating Agency Updates
On May 11, S&P released a request for market feedback and comment relating to its methodology for rating local and regional governments outside of the U.S. Comments on the proposed criteria are requested by June 11. S&P Release.
On May 11, S&P released a proposal to update its methodology and assumptions for rating U.S. state governments. Comments on the proposed criteria are requested by June 11.
On May 12, S&P released its updated criteria for investment earnings assumptions for federal government standalone housing transactions. S&P Release.
On May 12, S&P released revised recovery assumptions for TruPS or hybrid securities issued by U.S. banks that are held in the collateral portfolios of TruPS CDOS. S&P Release.
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CUSIP Government Stimulus ID Service
On May 10, CUSIP Global Services announced the launch of its Government Stimulus ID Service, which will track stimulus programs sponsored by the U.S. Government since 2008. The programs currently covered in the service are: FDIC-TLGP, TARP, TALF, Build America Bonds, Qualified School Construction Bonds, Recovery Zone Economic Development Bonds, Recovery Zone Facility Bonds, and the New Issue Bond Program. CUSIP Release.
Moody’s Receives Wells Notice
On May 7, Moody’s filed its Form 10-Q with the SEC, disclosing that it received a “Wells Notice” from the SEC Staff stating that the Staff is considering recommending that the SEC institute administrative and cease-and-desist proceedings against Moody’s in connection with its initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization. Moody’s Form 10-Q.
Creation of Joint SEC-CFTC Advisory Committee
On May 11, the SEC and the CFTC announced the formation of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues. The committee’s charter provides for: (i) identifying emerging regulatory risks, (ii) addressing and quantifying the impact of such risks and implications for investors and market participants, and (iii) furthering regulatory harmonization between the SEC and the CFTC. The committee will begin by reviewing the market events of May 6 to identify issues that may have contributed to the market’s volatility. CFTC Release.
Currency Liquidity Swap Facilities
On May 9 and 10, the Fed reactivated temporary currency liquidity swap facilities with the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank, and the Bank of Japan. Fed Release 1. Fed Release 2. Agreement between Fed and Bank of England. Agreement between Fed and European Central Bank. Agreement between Fed and Swiss National Bank.
FDIC Safe Harbor for Securitizations
On May 11, the FDIC approved a Notice of Proposed Rulemaking proposing a rule which would govern the treatment by the FDIC, as conservator or receiver of a failed bank, of financial assets previously transferred by the bank in a securitization. The proposed rule would create a safe harbor to confirm legal isolation of these financial assets if certain conditions are satisfied. Orrick Client Alert. Orrick Guide to NPR. FDIC Release. NPR.