Securities Regulation Daily Wrap Up, REGULATION TRACKER—Upcoming SEC and CFTC comment deadlines and effective dates, (Jan 31, 2022)

By WK Editorial Staff

A table of proposed rule comment dates and final rule effective and compliance dates for SEC and CFTC rulemaking.

Recent SEC activity includes the following:

Pay versus performance. The SEC has reopened the comment period for a 2015 pay versus performance proposing release. The 2015 release (Release No. 34-74835, ¶80,908) would implement Section 14(i) of the Securities Exchange Act, as added by Dodd-Frank Act Section 953(a), by adding new Item 402(v) of Regulation S-K. Item 402(v) would require registrants to describe how the executive compensation actually paid by the registrant related to the financial performance of the registrant over the time horizon of the disclosure. The reopening release seeks additional comments addressing new requirements, such as disclosures of additional performance metrics.

Regulation ATS. The SEC proposed amendments to include Treasury markets platforms within Regulation ATS. First, the proposed amendments would expand Regulation ATS for alternative trading systems that trade government securities, NMS stock, and other securities. The proposed amendments would no longer exempt from Regulation ATS those ATSs that limit securities activities to government securities or repurchase agreements or reverse repurchase agreements on government securities and register as broker-dealers or are banks. The proposal would also require the ATSs to file additional public disclosures, depending on whether they trade government securities, NMS stock, or other types of securities. In addition, all ATSs subject to the Fair Access Rule would need to have written standards for granting, limiting, or denying access to their services. The proposal also expands Regulation SCI to government securities, applying it to ATSs that meet certain volume thresholds in U.S. Treasury Securities or Agency Securities. The proposed amendments would also include Communication Protocol Systems within the definition of "exchange" by amending "exchange" under Rule 3b-16 to include systems that offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities.

Form PF. The SEC has proposed amendments to Form PF to enhance private fund reporting. The proposed amendments would require large hedge fund advisers to file current reports within one business day of certain triggering events. The current rule requires only quarterly or annual reporting, and this change would allow the SEC and FSOC to receive more timely information about events signaling market instability. Next, the threshold for reporting as a large private equity adviser would be lowered from $2 billion to $1.5 billion in private equity fund assets under management; the proposal would amend section 4 of Form PF for large private equity advisers to gather more information regarding fund strategies and other factors. Finally, large liquidity fund advisers would be required to report information about the liquidity funds they advise.

Security-based swaps. The SEC proposed new rules under the Exchange Act concerning security-based swaps. Proposed new Rule 9j-1 would prohibit fraudulent, deceptive, or manipulative conduct in connection with all transactions in security-based swaps, including misconduct in connection with the exercise of any right or performance of any obligation under a security-based swap. The rule would explicitly reach misconduct in connection with the ongoing payments and deliveries occurring throughout the life of a security-based swap. Proposed new Rule 15Fh-4(c) would prohibit personnel of an SBS entity from taking any action to coerce, mislead, or otherwise interfere with that entity's CCO in the performance of their duties. Finally, the Commission proposed for comment new Rule 10B-1, requiring any owner of a security-based swap position exceeding the threshold amount set by the rule to file a statement on EDGAR containing the information required by Schedule 10B.

Money market fund reforms. The SEC proposed amendments to reform the rules governing money market funds under the Investment Company Act designed to improve the resilience and transparency of those funds. Proposed amendments to Rule 2a-7 would increase the daily liquid asset and weekly liquid asset minimum liquidity requirements, to 25 percent and 50 percent respectively and remove the liquidity fee and redemption gate provisions. The proposal would also require institutional prime and institutional tax-exempt money market funds to implement swing pricing policies and procedures to require redeeming investors to bear the liquidity costs of their decisions to redeem. Reporting requirements on Forms N-MFP and N-CR would be amended to improve the availability of information about money market funds, and conforming changes would be made to Form N-1A.

Share repurchase disclosure. The SEC proposed amendments to rules regarding disclosure of an issuer’s repurchases of its equity securities. The proposed rules would require an issuer to provide a new Form SR regarding purchases of its equity securities for each day that it, or an affiliated purchaser, makes a share repurchase. Form SR would require: disclosure of the class of securities purchased; the total amount purchased; the average price paid; and as the aggregate total amount purchased on the open market in reliance on the safe harbor in Exchange Act Rule 10b-18 or pursuant to a 10b5-1(c) plan. The proposed amendments also would enhance the existing periodic disclosure requirements regarding repurchases. The proposed rules apply to issuers that repurchase securities registered under Exchange Act Section 12, including foreign private issuers and certain registered closed-end funds.

Rule 10b-5 plans. The SEC proposed amendments to Rule 10b5-1 that would add new conditions to the availability of the affirmative defense under Exchange Act Rule 10b5-1(c)(1), including a cooling-off period before trading could commence, prohibiting overlapping plans, and limiting single-trade plans to one trading plan per 12-month period. The amendments would also: create new disclosure requirements for insider trading policies and on the adoption, termination, and modification of Rule 10b5-1 and other trading arrangements by directors, officers, and issuers; create new disclosure requirements for executive and director compensation regarding the timing of certain equity compensation awards; and update Forms 4 and 5 to require corporate insiders subject to the reporting requirements of Exchange Act Section 16 to identify transactions made pursuant to a Rule 10b5- 1(c)(1) trading arrangement and to disclose promptly bona fide gifts of securities on Form 4.

Universal proxy. The SEC amended the proxy rules to require the use of a universal proxy card. The rule changes allow shareholders to vote by proxy for their preferred combination of board candidates, in a manner similar to voting in person. Under the new rules, parties in a contested director election must use universal proxy cards that include all director nominees presented for election at a shareholder meeting. The rules provide for exemptions and exclude director elections involving registered investment companies and business development companies. To facilitate the rule changes, the Commission also adopted amendments to establish certain notice, minimum solicitation, filing, formatting and presentation requirements, and other related amendments. The Commission also adopted new disclosure requirements relating to voting standards and certain voting options for all director elections, contested or uncontested. The amendments will apply to shareholder meetings featuring election contests held after August 31, 2022.

Filing Fee Disclosure and Payment. The SEC adopted amendments modernizing filing fee disclosure and payment methods. The amendments affect most fee-bearing forms, schedules, statements, and related rules to require each fee table and accompanying disclosure to include all required information for fee calculation in a structured format. The amendments also add the option for fee payment via Automated Clearing House and debit and credit cards and eliminate the option to pay via paper checks and money orders. With the amendments, filers will find filing fee information in a single location with a structured format that will allow for the quick identification and correction of errors while eliminating the need for filers to enter duplicate fee information in the header and the body of the filing, to avoid the possibility of inconsistent data entry.

Please see the SEC Regulation Tracker for proposal comment deadlines and final rule compliance dates.

Recent CFTC activity includes the following:

Swap clearing and IBOR transition. The CFTC is seeking information and public comment on how the Commission could amend its swap clearing requirement to address the cessation of certain interbank offered rates (IBORs) (e.g., the London Interbank Offered Rate (LIBOR)) used as benchmark reference rates and the market adoption of alternative reference rates; namely, overnight, nearly risk-free reference rates (RFRs).

Please see the CFTC Regulation Tracker for proposal comment deadlines and final rule compliance dates.

RegulatoryActivity: BrokerDealers InvestmentAdvisers CFTCNews CommodityFutures ClearanceSettlement Derivatives ExchangesMarketRegulation PublicCompanyReportingDisclosure RiskManagement SECNewsSpeeches Swaps