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Cadwalader's Reg-tracker for late March

Regulatory team

Cadwalader Wickersham & Taft

17 March 2021

Effective dates

16 March: The Securities and Exchange Commission has adopted a rule under the Securities Exchange Act 1934 and an amendment to Form SD to implement section 13(q) of the Exchange Act. Section 13(q) directs it to issue rules requiring every resource extraction issuer to include, in an annual report, information relating to payments made to a foreign government or the Federal Government for the purpose of the commercial development of oil, natural gas, or minerals. Section 13(q) requires these issuers to provide information about the type and total amount of payments made for each of their projects related to the commercial development of oil, natural gas, or minerals, and the type and total amount of payments made to each government. In addition, section 13(q) requires each resource extraction issuer to provide information about those payments in an interactive data format. This is of interest to exchange-facing private banks with HNW customers who are not keen on ESG-friendly investing.

25 March: FINRA, the Financial Regulatory Authority, is proposing to extend, to this date, the implementation of the amendments to FINRA Rule 4210 (Margin Requirements) pursuant to SR-FINRA-2015-036, other than the amendments pursuant to SR-FINRA-2015-036 that were implemented on 15 December 2016. The proposed rule change would not make any changes to the text of FINRA rules.

The SEC granted a proposal by FINRA to extend the effective date of amendments to Rule 4210 that establish margin requirements for "to-be-announced" or "TBA" transactions and other forward-settling agency securities transactions. In accordance with the request, the margin requirements will go into effect on 25 March 2021 rather than 25 March 2020.

26 March: NCUA effective date for Joint Ownership Share Accounts. The NCUA Board is amending its share insurance regulation governing the requirements for a share account to be separately insured as a joint account by the National Credit Union Share Insurance Fund (NCUSIF). The final rule provides an alternative method to satisfy the membership card or account signature card requirement necessary for insurance coverage. Under it, even if an insured credit union cannot produce membership cards or account signature cards signed by the joint accountholders, the signature card requirement can be satisfied by information contained in the account records of the insured credit union establishing co-ownership of the share account.

29 March: The Board of Governors of the Federal Reserve is publishing a final rule that amends Regulation EE to include additional entities in the definition of “financial institution” contained in section 402 Federal Deposit Insurance Corporation Improvement Act 1991 (FDICIA) so that they are covered by FDICIA's netting protections. The final rule also clarifies certain aspects of the existing activities-based test in Regulation EE.

Comment deadlines

22 March: The Securities and Exchange Commission is proposing to change Rule 144 to revise the holding-period determination for securities acquired upon the conversion or exchange of certain market-adjustable securities of issuers that do not have securities listed on a national securities exchange. It wants the holding period for those securities not to begin until they are acquired upon the conversion or exchange of the market-adjustable security. The SEC is also proposing to mandate electronic filing of Form 144 with respect to securities issued by issuers subject to Exchange Act reporting requirements, to amend the filing deadline for Form 144 to coincide with the filing deadline for Form 4 and to streamline the filing process in cases where both Form 4 and Form 144 are required to report the same transaction. Finally, it is proposing to eliminate the requirement to file a Form 144 for resales of securities of issuers that are not subject to Exchange Act reporting.

29 March: The Financial Crimes Enforcement Network has this date as a deadline for comments about fresh requirements for certain transactions involving convertible virtual currency or digital assets. On 23 December 2020, FinCEN published a notice of proposed rulemaking (NPRM) in which it proposed to require banks and money services businesses or MSBs related to certain transactions involving convertible virtual currency (CVC) or digital assets with legal-tender status (LTDA). On 15 January this year, FinCEN published a document reopening the comment period for the NPRM. In this reopening notice, it provided an additional 15 days for comments on the NPRM's proposed reporting requirements regarding information on CVC or LTDA transactions greater than US$10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in a jurisdiction identified by FinCEN. The notice also provided for an additional 45 days for comments on the NPRM's proposal to require banks and MSBs to report certain information regarding counterparties to transactions by their hosted wallet customers, and on the NPRM's proposed recordkeeping requirements. This sets one closing date for the comment period, instead of the two currently in effect, so all comments to the proposed NPRM are now due 60 days from the date of publication of this extension notice.

29 March: The NCUA board is seeking comment on a proposed rule to amend its credit union service organisation (CUSO) regulation. There are two objectives: to expand the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union (FCU) may originate; and to give the board more leeway to approve permissible activities and services. The NCUA is also seeking comment on broadening FCU investment authority in CUSOs.

Expiration dates

31 March: Because the Coronavirus has disrupted economic conditions and US financial markets, the OCC, the Federal Reserve board and the FDIC are issuing an interim final rule that temporarily revises the supplementary leverage ratio calculation for depository institutions. Under the interim final rule, any depository institution subsidiary of a US global systemically important bank holding company or any depository institution subject to Category II or Category III capital standards may elect to exclude temporarily US Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio denominator.

Additionally, under this interim final rule, any depository institution making this election must request approval from its primary federal banking regulator prior to making certain capital distributions so long as the exclusion is in effect. The interim final rule is effective as of the date of Federal Register publication and will remain in effect until 31 March 2021. The agencies are adopting this interim final rule to allow depository institutions that elect to opt into this treatment additional flexibility to act as financial intermediaries during this period of financial disruption. The tier 1 leverage ratio is not affected by this interim final rule.