/>iCFTC Staff Provides Additional Time to Comply with Reporting Rule Changes
The CFTC Division of Data issued a no-action letter to provide additional time (a little over six months) to comply with amendments to swap data reporting rules. The letter came in response to a request from ISDA (including three registered swap data repositories) indicating that operational and technological issues were affecting market participants' ability to comply with the amendments.
As previously covered, the amendments made a number of material changes to Parts 43, 45, 46 and 49 of the CFTC Rules. Currently, the amendments have a compliance date of May 25, 2022, except for certain block and cap amendments to CFTC Regulations 43.4(h) and 43.6, which have a compliance date of May 25, 2023.
Letter 22-03 provides no-action relief to entities that (i) fail to comply with the amendments before December 5, 2022, and (ii) fail to comply with the block and cap amendments before December 4, 2023, provided that the relevant persons comply with the regulations that were in effect for CFTC Rules Parts 43, 45, 46 and 49 as of January 1, 2021.
CFTC Commissioner Dawn D. Stump supported the no-action relief while also offering criticism of the CFTC's approach to block trade thresholds. Ms. Stump urged the CFTC to request additional information on the thresholds, which she said "were derived without reliable data and without public input." Ms. Stump also urged the CFTC to move forward with substituted compliance determinations for reporting regimes in non-U.S. jurisdictions.
Primary Sources
SEC Publishes Chair's Agenda
As required by the Regulatory Flexibility Act, the SEC published the Chair's agenda of rulemaking actions identifying rules the agency "expects to consider in the next 12 months that are likely to have a significant economic impact on a substantial number of small entities." The information in the agenda is current as of September 27, 2021.
The agenda includes individual agenda entries for the (i) Division of Corporate Finance, (ii) Division of Investment Management and (iii) Division of Trading and Markets. The individual agenda entries are divided by the proposed rule stage, final rule stage, long-term actions, and completed actions.
The proposed rule stage and the final rule stage for the Division of Corporate Finance include the following topics:
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Listing Standards for Recovery of Erroneously Awarded Compensation (Proposed);
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Pay versus Performance (Proposed);
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Mandated Electronic Filings (Proposed);
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Rule 144 Holding Period and Form 144 Filings (Proposed);
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Universal Proxy (Final); and
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Filing Fee Disclosure and Payment Methods Modernization (Final).
The proposed and final rule stages for the Division of Investment Management are:
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Reporting of Proxy Votes on Executive Compensation and Other Matters (Proposed); and
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Tailored Shareholder Reports, Treatment of Annual Prospectus Updates for Existing Investors, and Improved Fee and Risk Disclosure for Mutual Funds and Exchange-Traded Funds; Fee Information in Investment Company Ads (Final).
The long-term actions for the Division of Investment Management include entries concerning separate amendments of the Custody Rules for Investment Advisers and for Investment Companies, as well as amendments to include Proxy Fund Rules.
Lastly, the agenda lists certain rules under the proposed rule stage for the Trading and Markets Division. The individual entry includes Removal of References to Credit Ratings from Regulation M.
Questions and public comments on the agenda and individual agenda entries are due by March 2, 2022.
Primary Sources
SEC Publishes Annual Report on Rating Agencies
The SEC's Office of Credit Ratings ("OCR") examined Nationally Recognized Statistical Rating Organizations ("NRSROs") in its annual Staff Report for 2021.
The report provided the staff's review of NRSROs and focused on key subjects, including competition, transparency and conflicts of interest among the organizations. OCR's examination program examined and reported on eight areas mandated by statute, along with Environmental, Social and Governance ("ESG") considerations, COVID-19-related risks, and the treatment of a variety of different types of securities, including collateralized loan obligations, commercial real estate, consumer asset-backed securities, low-investment-grade-rated corporates and municipals.
The discussion of the NRSOs rating of ESG-related products is the most notable addition to the annual report, as the topic was nowhere mentioned in the prior report published in January 2020. The SEC found that rating agencies and their affiliates have developed "an increasing number" of ESG-related products, which has resulted in risks to rating agency compliance. The identified risk factors include inconsistent methodologies, inadequate disclosures, failures of internal controls and conflicts of interest.
Notwithstanding the criticisms of rating agencies with respect to ESG, the report indicates that, over time, the various rating agencies have been steadily improving in their compliance (see Chart 3 on page 20 of the most recent OCR report).
