SEC News: New Rules for Investment Advisers & Companies Proposed, Pilot to Evaluate Tick Size Impact Approved, Outreach Program to Help Ensure Compliance Unveiled, and Cross-Border Swap Rules Approved

SEC Makes Proposals to Enhance Disclosure and Reporting by Investment Companies and Advisers
The U.S. Securities and Exchange Commission is proposing forms, amendments, and rules that will update and improve the way investment firms and their advisers disclose and report information. This would enhance the quality of data available to investors while allowing the regulator to do a better job of gathering information from firms and their advisers.

The proposals would affect data reporting for exchange-traded funds, mutual funds, and other registered investment companies, which would have to submit a monthly portfolio reporting form and a yearly one as well. Standardized and enhanced disclosure in financial statements would be required, and firms would be able to publish shareholder reports online. Also, investment advisers would have to provide more information to the SEC and investors in registration and reporting forms.

Commission Approves Pilot Program to Assess the Benefit of Wider Tick Sizes
The SEC has approved a proposal by the Financial Industry Regulatory Authority and the National Securities Exchanges for a two-year pilot program that would expand minimum quoting and trading increments, also known as tick sizes, for certain smaller companies’ stocks. The program will be used to evaluate whether the broader tick sizes improve these stocks’ market quality and if they benefit investors and issuers.

The pilot will start in May 2016 and include stocks of companies with no more than $3 billion in market capitalization, a volume weighted average price of at least $2/trading day, and an average daily trading volume of no more than $1 million shares.

New Outreach Programs Will Help Firms with Compliance
Earlier this month, the SEC opened registration for outreach programs designed to help financial firms comply with Regulation SCI, a Commission rule that seeks to protect investors by enhancing the technology backing the U.S. securities market.

Compliance with this rule starts in the fall. Those required to fulfill it must have comprehensive procedures and policies for technology systems, perform continuity testing, review automated systems every year, and take the proper, corrective measures when problems arise.

Proposed Cross-Border Security Based Swap Rules Impact Activities Within the U.S.
In April, the SEC proposed new rules related to swap transactions that are security-based and involve a person who is not a U.S. citizen engaged in activities in this country. The rules are designed to make sure that U.S. and non-U.S. dealers are subject to the same registration, dissemination, reporting, and business conduct requirements when taking part in security-based swap activities in the country. The SEC wants there to be greater transparency and oversight.

The transactions would have to deal with Regulation SBSR‘s requirements for public dissemination and reporting. Also, if a non-US firm were a security swap dealer that was registered, it would also have to abide by The Dodd-Frank Act’s Title VII business conduct standards.

Our stockbroker fraud law firm works with investors throughout the US to help them recoup their investor losses. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Securities and Exchange Commission