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Article
Publication date: 5 September 2016

Paul M. Architzel, Dan M. Berkovitz, Gail Bernstein, Seth Davis and Ted Serafini

To analyze the differences between the SEC’s newly adopted final business conduct rules for security-based swap dealers and major security-based swap participants under Section…

64

Abstract

Purpose

To analyze the differences between the SEC’s newly adopted final business conduct rules for security-based swap dealers and major security-based swap participants under Section 15F(h) of the Securities Exchange Act of 1934 and the parallel rules promulgated under the Commodity Exchange Act by the CFTC with respect to swap dealers and major swap participants.

Design/methodology/approach

This article discusses select rules under each regulatory regime and highlights the major differences and potential effects of each.

Findings

This article concludes that while the SEC’s intent was to harmonize its final rules with the parallel CFTC rules, there are substantive differences between the two sets of rules that firms should consider when deciding how to structure their security-based swap dealer activities.

Originality/value

This article contains insightful analysis of the newly adopted SEC Business Conduct Rules and highlights some of the ways firms will likely be affected moving forward.

Details

Journal of Investment Compliance, vol. 17 no. 3
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 7 September 2012

Paul M. Architzel and Petal P. Walker

The paper's aim is to explain the rules the Commodity Futures Trading Commission has adopted for the segregation of cleared swaps customers' collateral as mandated by the…

87

Abstract

Purpose

The paper's aim is to explain the rules the Commodity Futures Trading Commission has adopted for the segregation of cleared swaps customers' collateral as mandated by the Dodd‐Frank Act.

Design/methodology/approach

The paper discusses: the deliberations that led the commission to arrive at the legal separation with operational commingling model (“LSOC”) as the regulatory standard; the characteristics of the LSOC model; and the possible future enhancements to the segregation framework under consideration by the commission, including the guaranteed clearing participant model.

Findings

Although the commission has adopted the final rules that will implement LSOC as the segregation model for cleared swaps, a number of significant issues remain open and are likely to be revisited by the commission. Additional changes to the segregation framework may be proposed as the lessons of the MF Global Bankruptcy proceedings become evident.

Originality/value

Practical guidance from experienced financial services lawyers is provided by the paper.

Details

Journal of Investment Compliance, vol. 13 no. 3
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 25 November 2013

Paul M. Architzel, Gail C. Bernstein and Mahlet Ayalew

The Dodd-Frank Act added a number of prohibited trading practices on futures markets and swap execution facilities. In May 2013, the CFTC issued guidance on how it intends to…

3104

Abstract

Purpose

The Dodd-Frank Act added a number of prohibited trading practices on futures markets and swap execution facilities. In May 2013, the CFTC issued guidance on how it intends to interpret these prohibitions. Persons trading on these facilities should understand the guidance and how it affects their trading activities. This article aims to focus on the issues.

Design/methodology/approach

The article analyzes the prohibitions and the CFTC's related guidance using a question and answer format to make it accessible to affected market participants.

Findings

The new trading prohibitions include spoofing, violating bids and offers, and recklessly disregarding an orderly close. Different standards of scienter (state of mind) apply to each. Intent is required to violate the anti “spoofing” provision; recklessness is required to violate the disregarding the orderly close provision, but no finding of intent is required for violating bids or offers. The CFTC will evaluate the facts and circumstances at the time of the conduct and look at the available information and what the person knew or should have known.

Practical implications

The Guidance is applicable to all persons who trade on futures markets or on the coming swap execution facilities (SEFs). In particular, persons trading on these facilities should be aware that certain trading practice prohibitions may be violated without a finding of intent.

Originality/value

The antidisruptive prohibitions and guidance are new. Market participants will need to understand and take care to ensure that their trading conduct does not run afoul of these new provisions of the Act and the Commission's interpretive guidance thereunder.

Details

Journal of Investment Compliance, vol. 14 no. 4
Type: Research Article
ISSN: 1528-5812

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