CUBE RegNews:
9^th March

SEC new rule proposal

The Securities and Exchange Commission (SEC) is proposing a new rule under the Investment Advisers Act of 1940 to address how investment advisers safeguard client assets.

Comments should be received on or before May 8th.

Cyber Resilience Board for pan-European Financial Infrastructures

Fabio Panetta, of the European Central Bank (ECB), has spoken about the Euro Cyber Resilience Board for pan-European Financial Infrastructures (ECRB) and why it is an important entity in the fight against cyber threat actors.  He highlighted three key areas:

• information sharing, the ECRB’s Cyber Information and Intelligence Sharing Initiative (CIISI-EU) allows members to exchange information about cyber threats and mitigation in a secure and trusted group environment;
• establishment of a crisis coordination protocol that facilitates cooperation and coordination, allowing members to exchange and respond to major cyber threats and incidents; and
• training and awareness, the ECRB conducts joint assessments and training sessions to increase common knowledge and understanding.

Panetta concludes: “Existing threats are becoming more dangerous and new threats are on the horizon. We therefore need to adapt our operational and cyber resilience frameworks constantly at the individual level as well as collectively through strict regulation, enforcement and prosecution. Future cooperation between public and private institutions will also be crucial. The ECRB can make a decisive contribution to this effort in relation to the financial system”.

MAS MD highlights three new drivers of asset markets

In  a speech at the IMAS-Bloomberg Investment Conference, Ravi Menon picked out three key uncertainties that will drive financial market returns and risks

• short term, inflation: “the key driver of risk and return is the trajectory of interest rates – which in turn depends on the inflation outlook and monetary policy response”.
• medium term, geo-economic fragmentation: “no country will emerge unscathed with rising geoeconomic fragmentation, with emerging market economies set to bear the brunt of reduced trade and capital mobility”
• Long term, climate change: “Perhaps the most significant financial risk for investors over the long term is climate change”.

MAS: compliance toolkit for banks

Updated guidance from the Monetary Authority of Singapore has been published which ncludes the common applications, notifications and submissions made to MAS that are applicable to wholesale banks and full banks. However, MAS stresses it is not exhaustive.

The toolkit is made up of four sections:

• Applications, Notifications and Regulatory Submissions Applicable to Wholesale Banks and Full Banks  Applications, Notifications and Regulatory Submissions Applicable to Full Banks only Section
• Applications, Notifications and Regulatory Submissions Applicable to Wholesale Banks only Section
• Applications, Notifications and Regulatory Submissions Applicable to banks that have been issued a direction under section 43(1) of the MAS Act

International Swaps and Derivatives Association Chief Executive discusses counterparty and liquidity risk

Addressing the CFTC Market Risk Advisory Committee, O’Malia covered several topics perceived to be vulnerable to counterparty or liquidity shocks. These include:

• digital assets;
• climate risk;
• block rules; and
• treasury markets.

He ended by reminding the committee that the 30^th June end date for US dollar LIBOPR is approaching, urging firms to continue to move away from LIBOR and use the tools that are available for legacy transactions.

SEC inside dealing charges

The Securities and Exchange Commission (SEC) has charged Terren S Peizer, Executive Chairman of the Santa Monica, California-based healthcare treatment company Ontrak, Inc, with insider trading for selling more than $20 million of Ontrak stock between May and August 2021 while in possession of material nonpublic negative information related to the company’s largest customer.

The SEC’s complaint charges Peizer and Acuitas Group Holdings, his investment vehicle, with violating antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5 thereunder. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an officer-and-director bar for Peizer.

In a parallel action, the US Department of Justice today announced criminal charges against Mr. Peizer.

FCA updates Perimeter Report

The Financial Conduct Authority (FCA) has updated its Perimeter Report which outlines their regulatory remit as set by UK Parliament.  The update addresses three areas:

Amongst other areas, the update covers:

• the roll-out of a new holistic approach to higher-risk firms applying for FCA authorisation;
• application of greater scrutiny of a firm’s financial information when we receive an application for authorisation
• a range of new approaches developed for four areas that present specific risks: Significant Influence Functions, Appointed Representatives and Principals, Consumer Contacts and Repeat Breaches of financial promotions.