Broker-Dealer

Visual Memorandum: SEC’s Security-Based Swap Capital, Margin and Segregation Rules

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On June 21, 2019, the SEC adopted security-based swap (SBS) capital, margin and segregation requirements (the SEC Rules) for SBS dealers (SBSDs) and major SBS participants, revised the capital and segregation requirements for broker-dealers that are not SBSDs to the extent they engage in SBS activities, and increased the minimum capital requirements for broker-dealers authorized to use internal models to compute net capital. The SEC Rules do not start the registration or compliance clock for SBSDs.

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Davis Polk Client Memorandum: SEC and FINRA Staffs Highlight Broker-Dealer Regulatory Challenges Raised by Digital Assets—And Hint at Solutions

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Broker-dealer custody of on-blockchain assets has been a key hurdle in the development of a more regulated financial infrastructure for digital assets in the United States.  In a joint statement (the Joint Statement), the staffs of the SEC and FINRA outlined their concerns about broker-dealers’ ability to comply with their financial responsibility rules—in particular, the requirement to obtain and maintain physical possession or contr

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Davis Polk Visual Memorandum: SEC Adopts Regulation Best Interest, Form CRS and Related Advisers Act Interpretations

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The SEC adopted its long-awaited Regulation Best Interest, establishing new standard of conduct regulations for SEC-registered broker-dealers and their associated persons that are natural persons.  At the same time, the SEC adopted (i) a new relationship summary disclosure requirement, on Form CRS, for broker-dealers and investment advisers who offer services to retail investors and (ii) two interpretive releases—one on the investment adviser fiduciary duty and the other on the solely incidental exemption for broker-dealers from the investment adviser regulations.

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Chairman Jay Clayton and Director Brett Redfearn Preview Potential Further Equity Market Structure Reforms—Exchange Market Data Business Model Targeted

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Earlier this month, SEC Chairman Jay Clayton and Division of Trading and Markets Director Brett Redfearn engaged in a public dialogue on equity market structure issues.  In addition to reviewing three equity market structure initiatives adopted by the SEC in 2018 (the transaction fee pilot,

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U.S. Regulators Announce BSA/AML Enforcement Actions Against U.S. Broker-Dealers

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As 2018 came to a close, U.S. financial regulators continued to pursue anti-money laundering (“AML”) enforcement actions against financial institutions, announcing monetary penalties against and resolutions with three U.S.

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SEC Adopts Enhanced Order Handling Disclosure Requirements

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The SEC recently voted to adopt amendments to Rule 606 of Regulation NMS (the “Final Rule”) that expand broker-dealers’ disclosure obligations with regard to how they handle investors’ orders.

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