Insight Robin Powers · June 24, 2011
Canadian Entities Aim for OTC Derivatives Regulation
Though Canada represented only $9 trillion of the $600 trillion OTC derivatives market last year, Canadian investors were not exempt from the fury of the recent market meltdown. In 2007, Canadian investors involved in the asset-backed commercial paper market suffered losses of $35 billion. But, losses notwithstanding, our northerly neighbors have only recently begun to discuss their intentions with respect to regulating the OTC derivatives market.
Yesterday, Canada’s securities commissions issued a proposal to require that OTC derivative transactions be reported through trade repositories that meet international standards. Kevin Fine, the director of the derivatives branch at the Ontario Securities Commission (OSC), said trade repositories were the first target of the securities regulators because they will do the most to expose market risk and irregularities.
Insight June 23, 2011
On June 20, 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) approved a new generic top-level domain (gTLD) program, first introduced in 2008. The program will greatly increase the number of gTLDs allowed for use on the internet, which is currently limited to 22 (such as .com, .org, and .net).
Insight Robin Powers · June 23, 2011
SEC Provides Guidance and Temporary Relief Regarding Security-Based Swap Provisions of Dodd-Frank Act
The SEC today issued guidance as to whichTitle VII requirements will apply to security-based swap transactions when Dodd-Frank goes into effect. It also granted temporary relief to market participants from compliance with most of the new Exchange Act requirements that would otherwise apply on July 16th.
Insight June 22, 2011
On March 14, 2011, Senators John Kerry and Richard Lugar introduced a bill titled the Startup Visa Act of 2011, which is an updated version of a 2010 bill. If passed, the act would provide temporary work visas to various kinds of foreign workers if certain financial benchmarks are met.
Insight Robin Powers · June 22, 2011
The Status of Regulation in the European Union
With Dodd-Frank taking effect in less than a month, officials on both sides of the Atlantic have been pressuring one another to implement stricter financial regulations, while equivocating on the regulations that they are willing to accept at home. Michel Barnier, European Commissioner for Internal Market and Services recently explained to well-known think tank the Brookings Institute that the E.U.’s failure to adopt measures similar to Dodd-Frank stemmed from a belief that the U.S. will not follow through on implementing stricter financial regulations. Barnier stated, “you will understand that Europe cannot be naïve. And will not be naïve. Equality and reciprocity are not only justified. They are also necessary.”
Insight Robin Powers · June 21, 2011
Testimony by Mary Schapiro on Financial Regulatory Reform: The International Context
In testimony before the House Financial Services Committee, SEC Chair Mary Schapiro noted that the US regulators have consulted, and will continue to consult with, international securities regulators that are considering OTC derivatives market reforms. Schapiro explained that because the OTC derivative marketplace already exists as a functioning global market with limited oversight or regulation, international coordination is needed to limit opportunities for cross-border regulatory arbitrage and competitive disadvantages, and to address unnecessarily duplicative and conflicting regulations. The overall goal is to reduce systemic risks, increase transparency, and improve the integrity of the OTC derivatives marketplace, while mindful of the potential effects on efficiency and liquidity.
Insight June 20, 2011
As discussed in my December 13, 2010 post, the National Advertising Division (NAD) of the Council of Better Business Bureaus (BBBs) offers a streamlined, self-regulatory mechanism for remedying false advertising claims made in nationally distributed advertisements. While NAD has a 95% success rate, those advertisers who fail to follow NAD’s recommendations may find themselves before the FTC upon NAD’s recommendation.
On February 16, 2011, I reported on NAD’s recommendation that Nano-Tex cease making several (green and other) advertising claims in connection with three of its fabric coating products. On January 24, 2011, I discussed NAD’s recommendation that Sherwin-Williams modify its no-VOC claims for its HARMONY brand paints.
Insight Robin Powers · June 20, 2011
Investment Advisor Registration Deadline Causing Confusion
In the Private Fund Investment Advisers Registration Act of 2010, Congress adopted changes to the Investment Advisers Act of 1940 to require many more managers of hedge funds or private equity funds to register as investment advisers. Registered advisers are expected to update their books and records practices in order to comply with the new requirements, and may also need to alter their asset valuation and asset custody practices. Some advisers will likely hire additional compliance staff in order to meet the Dodd-Frank requirements.
Insight Robin Powers · June 19, 2011
SEC to provide guidance on Dodd-Frank requirements and extend temporary rules under the Exchange Act.
As previously noted, the Securities Exchange Commission granted itself an extension to finalize the rules mandated by Dodd-Frank. The Commission announced that it will shortly clarify which provisions of Title VII will automatically go into effect on July 16, alter some of the requirements for those automatic provisions and provide temporary relief from other provisions, if necessary. The Commission also plans to extend temporary rules under the Securities Act, the Exchange Act, and the Trust Indenture Act. The SEC stated its hope that these actions will support the flow of credit default swaps into the clearing houses during the extension period.
Insight Robin Powers · June 18, 2011
FIA and ISDA Publishes Documentation for Cleared Swaps in an effort to add structure to OTC market pending full implementation of Dodd-Frank Act and similar regulation in foreign jurisdictions.
In anticipation of the clearing requirements in Dodd-Frank, each of the major clearing houses published proprietary agreements with the intent to best fit OTC swaps clearing into its portfolio of offerings. However, with multiple clearing houses each with its own required documentation, OTC market participants were undoubtedly spending considerable time and money understanding and negotiating on many fronts.