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Regulation

FINRA Seeks to Strengthen Penalties on Repeat Offenders The Financial Industry Regulatory Authority’s (FINRA) board of governors has approved the next step in what it terms its ongoing initiative to strengthen controls on brokers with a history of significant past misconduct. The recommended changes also seek to ensure greater accountability for firms that choose to employ high-risk brokers. FINRA says it plans to issue a Regulatory Notice seeking comment on the key proposals – which would strengthen protections for investors and range from additional disclosure on its BrokerCheck platform to heightened supervision of brokers appealing disciplinary matters.
Industry Bodies Criticise Reg AT Rules (Again) The Futures Industry Association and the FIA Principal Traders Group have yet again submitted comments to the Commodity Futures Trading Commission’s opposing what they describe as the overly prescriptive regulation of automated trading proposed by the Commission. The comments were delivered in response to the supplemental notice of proposed rulemaking regarding Regulation AT. This is the third comment letter that the two industry bodies have submitted about this proposed regulation. FIA and FIA PTG also provided a detailed response to the Commission’s 2013 concept release on risk controls and system safeguards for automated trading environments.
CFTC Adds 71 Names to RED List The US Commodity Futures Trading Commission has more than trebled the number of names on its Registration Deficient (RED) list of unregistered foreign entities that the CFTC has reason to believe are soliciting and accepting funds from US residents at a retail level for, among other things, trading in binary options or FX and who are required to register with the CFTC but, in fact, are not registered. CFTC has added 71 names to the list that previously contained 30 firms, the full list can be found at www.SmartCheck.gov/REDList.
CFTC Extends Margin Rule Relief Pending Agreement with EC The US Commodity Futures Trading Commission (CFTC) has further extended its no action relief for swap dealers that are subject to, and in compliance with, the margin requirements for non-centrally cleared OTC derivatives in the European Union (EMIR RTS) for failure to comply with the CFTC’s final margin rule. The extension to the relief, which was first granted in February, comes as both the US and European Union continue to investigate the other’s suitability for substituted compliance with their individual final margin rules.
The Fiduciary Rule: New Uncertainty The US Department of Labor (DOL) has officially delayed by 60 days the implementation of an Obama Administration regulation (Fiduciary Rule) that would have significantly broadened the ways an investment manager, broker-dealer or other service provider could be considered an investment advice fiduciary to retirement plans under the US Employee Retirement Income Security Act of 1974 (ERISA). Those service providers in the foreign exchange industry most at risk of becoming investment advice fiduciaries under the Rule are those who discuss their products and services with ERISA fiduciaries or participants of retirement plans, as well as the owners of individual retirement accounts. A noteworthy aspect of the Rule is that sales pitches and other marketing materials can, under certain circumstances, inadvertently create investment advice fiduciary relationships under ERISA. Discussions regarding strategies may also be swept up by the Rule.
MahiFX Gets FCA Authorisation Technology provider MahiFX says it has received authorisation to provide regulated products and services by the UK’s Financial; Conduct Authority (FCA). The firm says it recognises that authorisation from the UK-based financial regulatory body was important for its European-based clients, in addition to already being authorised and regulated by both the Australian Securities and Investment Commission and the New Zealand Financial Markets Authority. “As a regulated entity, MahiFX is required to meet strict financial standards, including capital adequacy requirements,” says MahiFX compliance and finance manager, Nicole Vivian. “On a regular basis, MahiFX is required to submit financial reports to regulators and must meet the highest standards of corporate governance, financial reporting and disclosure.”
Former Citi Traders Fined for Spoofing The US Commodity Futures Trading Commission (CFTC) has issued two separate Orders filing and settling charges against two former Citigroup traders for spoofing US Treasury futures markets. Stephen Gola and Jonathan Brims, who have been dismissed by the bank, are required to pay $350,000 and $200,000 in civil monetary penalties respectively. Both traders are banned from trading in the futures markets until six months after each has made full payment of his respective penalty. In addition, Gola and Brims are ordered to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing, as charged.
CFTC Extends Swap Confirmation Relief The US Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) has issued a no-action letter which extends relief associated with swap trade confirmation requirements that was due to expire on March 31, 2017. The letter extends the relief until the effective date of any revised CFTC regulations regarding trade confirmation requirements and is subject to terms and conditions in the letter. The relief requires that a SEF continue to report all swap data that it is currently reporting.
Giancarlo Lays Out New Regulatory Agenda Following the news that he had been nominated by the Trump administration to be the new chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, has laid out a new agenda for the Commission. Speaking at the FIA Boca conference in Florida, Giancarlo emphasised the need for the CFTC to foster economic growth in the markets that it oversees by reducing regulatory burden, improving market intelligence and embracing new technology. To help reduce the regulatory burden on derivatives market participants, Giancarlo announced the launch of “Project KISS”, with the acronym standing for “Keep It Simple Stupid”.
Thomson Reuters Adds MiFID II Tool Thomson Reuters is creating a suite of reporting services that will support the workflow of market participants in their efforts to meet post-trade transparency requirements mandated by the Markets in Financial Instruments Directive II. In preparation for the new regulations, the company says it is working closely with over 50 European exchanges and more than 30 additional venues to onboard new MiFID II content to its Elektron Data Platform. It is also providing test data to market participants so that they can prepare their systems for new parameters, such as high-precision time-stamps, in advance of MiFID II deadlines.