SEC

SEC Adopts Rule Amendments to Improve Municipal Securities Disclosure

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On August 20, 2018, the Securities and Exchange Commission adopted amendments to Rule 15c2-12 of the Securities Exchange Act in order to enhance transparency in the municipal securities market. The adopted changes focus on material financial obligations that could impact an issuer’s liquidity, overall creditworthiness or an existing security holder’s rights. The amendments add two new events to Rule 15c2-12 of the Securities Exchange Act, which requires brokers, dealers and municipal securities dealers that are acting as underwriters in primary offerings of municipal securities to reasonably determine that the issuer or obligated person has agreed to provide to the Municipal Securities Rulemaking Board timely notice of certain events. Press Release. Final Rule.

SEC Disapproves the Listing and Trading of Nine Bitcoin Related Exchange Traded Products

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On August 22, 2018, the SEC released three Orders, acting through authority delegated to the Division of Trading and Markets, that disapproved: (i) a proposed rule change application by NYSE Acra, Inc. that would have permitted it to list and trade the shares of the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF; (ii) a proposed rule change application by NYSE Acra, Inc. that would have permitted it to list and trade shares of five exchange-traded products of the Direxion Shares ETF Trust II; and (iii) a proposed rule change application by the Cboe BZX Exchange, Inc. that would have permitted it to list and trade two classes of shares of funds of the GraniteShares ETP Trust. READ MORE →

SEC Overrules Proposed Rule Change by BZX to List and Trade Shares of the Winklevoss Bitcoin Trust

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On July 26, 2018, the Securities and Exchange Commission (“SEC“), over the objection of Commissioner Peirce, disapproved a proposed rule change application by the Bats BZX Exchange, Inc. (“BZX“) that would have permitted it to list and trade shares of the Winklevoss Bitcoin Trust. This Order, effectively, reaffirmed and superseded the action taken by the SEC on March 10, 2017, acting through authority delegated to the Division of Trading and Markets, that denied a similar application. In issuing its July 26 Order, the SEC determined that BZX had “not met its burden under the [Securities Exchange of 1934] and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

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

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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.

CFTC and SEC Announce Approval of New MOU

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On June 28, 2018, the Commodity Futures Trading Commission (“CFTC“) and the Securities and Exchange Commission (“SEC“) announced that they have entered into a new memorandum of understanding – the agencies had previously entered into a memorandum of understanding in 2008 – designed to be “more relevant in the current market environment and promote efficiency in rule making, regulatory oversight, and enforcement [.]” CFTC Release. SEC Release.