Latest updates

NASAA issues report on broker-dealer policies and procedures for leveraged or inverse ETFs
Morrison & Foerster LLP
  • USA
  • 12 November 2019

The North American Securities Administrators Association recently issued a report that provided a warning as to the risks of leveraged or inverse exchange-traded funds. The report urges broker-dealers to tailor their supervisory procedures if they allow exchange-traded fund (ETF) transactions in these products. Among other things, the report concludes that broker-dealers should carefully consider whether to permit purchases of leveraged or inverse ETFs in retail customer accounts.

Public consultation on appropriate choice and use of Japanese yen interest rate benchmarks
Nagashima Ohno & Tsunematsu
  • Japan
  • 29 October 2019

To address the risk that the London Interbank Offered Rate may be discontinued, the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks was established to recommend the appropriate choice and use of Japanese yen interest rate benchmarks depending on the type of financial transaction involved and develop transition plans for a new framework enabling the use of Japanese yen interest rate benchmarks. The committee recently published a consultation paper in this regard.

Bond issuers will retain quick access to Swiss debt capital market under new regime
Niederer Kraft Frey
  • Switzerland
  • 22 October 2019

As part of its effort to meet EU-equivalent standards, Switzerland is in the process of implementing a comprehensive reform package which will fundamentally change the Swiss financial market regulatory framework and introduce the country's first harmonised and coherent prospectus regulation. The new regime will ensure that bond issuers will continue to have efficient and quick access to the Swiss debt capital market – one of the legislature's key goals.

SEC proposes changes to business, legal proceeding and risk factor disclosure requirements
Morrison & Foerster LLP
  • USA
  • 10 September 2019

The Securities and Exchange Commission (SEC) recently proposed amendments to the description of business, legal proceeding and risk factor disclosures that are required pursuant to Regulation S-K. While the SEC's concept release dealt with a wide variety of topics, these latest proposals represent a more measured approach towards modernising and simplifying such disclosure requirements.

Union Budget 2019: key capital markets highlights
  • India
  • 06 August 2019

On the back of its new electoral mandate, the Modi Sarkar 2.0 government recently presented its first budget. The budget focuses primarily on infrastructure spending and boosting investment from private and foreign investors, with the government forecasting that the Indian economy will grow to $5 trillion by 2025. Following the budget announcement, a slew of reforms and policies are expected in the coming months. This article highlights some of the key capital market-related amendments.

First token offering qualified by SEC under Regulation A
Morrison & Foerster LLP
  • USA
  • 30 July 2019

Blockstack Token LLC, a wholly owned subsidiary of Delaware public benefit corporation Blockstack PBC, recently became the first company to have an offering of digital assets qualified by the Securities and Exchange Commission under Regulation A. Although Blockstack's is the first Regulation A token offering to be qualified, it demonstrates the potential for other blockchain-based companies to use Regulation A as a viable capital-raising tool.

SEC requests comment on securities offering exemptions
Morrison & Foerster LLP
  • USA
  • 23 July 2019

The Securities and Exchange Commission (SEC) recently requested public comment on ways to simplify, harmonise and improve the registration exemptions under the Securities Act. In its concept release, the SEC identified numerous topics to be addressed, such as evaluating the framework and coverage of existing registration exemptions. Any developments in this area will be of interest to the structured products industry.

SEC clarifies investment adviser standard of conduct
Morrison & Foerster LLP
  • USA
  • 16 July 2019

The Securities and Exchange Commission recently issued an interpretive release designed to reaffirm, and in some cases clarify, the standard of conduct that investment advisers owe to their clients. While the interpretive release includes no new regulation, it clarifies the type of disclosure, policies and procedures that advisers should adopt to ensure that they continue to operate in a manner that is consistent with their fiduciary obligations.

EU equivalence assessment of Swiss stock exchanges
Niederer Kraft Frey
  • Switzerland
  • 16 July 2019

The Federal Department of Finance recently announced that it was activating the measures adopted by the Swiss Federal Council to protect the Swiss stock exchange infrastructure in anticipation of the expiration of the stock market equivalence granted by the European Commission. Notably, the protective measures do not affect companies with registered offices in Switzerland that are listed and traded exclusively on exchanges outside Switzerland.

Initial public offerings – an overview
Fischer Behar Chen Well Orion & Co
  • Israel
  • 02 July 2019

The second half of 2018 was characterised by a sharp decrease in the number of equity and debt initial public offerings in Israel and a significant rise in bond yields. The Tel Aviv Stock Exchange (TASE) and the Israeli Securities Authority continue to promote various initiatives to encourage non-Israeli issuers to list on the TASE, including the publication of a bulletin clarifying the rules that apply to the public offering of securities, listing and delisting and ongoing disclosures by dual-listed companies.

SEC proposes changes to 'accelerated filer' and 'large accelerated filer' definitions
Morrison & Foerster LLP
  • USA
  • 11 June 2019

The Securities and Exchange Commission (SEC) recently proposed amendments to the 'accelerated filer' and 'large accelerated filer' definitions adopted under the Securities Exchange Act 1934. The SEC believes that it can promote capital formation for smaller reporting issuers by more appropriately tailoring the types of issuer that are included and revising the transition thresholds for accelerated and large accelerated filers.

Non-public offerings in Switzerland – an endangered species?
Niederer Kraft Frey
  • Switzerland
  • 14 May 2019

If everything goes according to plan, on 1 January 2020 Switzerland will have successfully overhauled its financial market legislation with the entry into force of the Financial Services Act and the Financial Institutions Act. An important element of the overhaul is the introduction of a new comprehensive and harmonised prospectus regime. However, the question remains as to whether non-public offerings as a species will survive in Switzerland.

SEC adopts FAST Act amendments to streamline disclosure requirements
Morrison & Foerster LLP
  • USA
  • 30 April 2019

The Securities and Exchange Commission (SEC) recently adopted rule amendments to modernise and simplify certain disclosure requirements in Regulation S-K and related rules and forms. These amendments were adopted pursuant to a 2015 Fixing America's Surface Transportation Act (FAST Act) directive and are based in part on the SEC's report to congress under the FAST Act. The amendments will require issuers' immediate attention as they prepare for upcoming filings.

Amendments to Financial Instruments and Exchange Act
Nagashima Ohno & Tsunematsu
  • Japan
  • 30 April 2019

Cabinet recently submitted a bill to the 198th session of the Diet to amend, among other acts, the Financial Instruments and Exchange Act and the Payment Services Act. Among other things, the amendments introduce new regulations for security-type digital tokens (ie, initial coin offerings and security token offerings) and clarify that digital tokens issued in consideration for crypto assets will be regarded as deemed securities.

SEC announces settlements resulting from Share Class Selection Disclosure Initiative
Morrison & Foerster LLP
  • USA
  • 23 April 2019

The Securities and Exchange Commission (SEC) recently announced settlements with 79 investment advisers who self-reported violations of the Investment Advisers Act in connection with the SEC Division of Enforcement Share Class Selection Disclosure Initiative. The advisers collectively agreed to return more than $125 million in fees and prejudgment interest to clients.

SEC proposes to expand 'test-the-waters' accommodation
Morrison & Foerster LLP
  • USA
  • 16 April 2019

The Securities and Exchange Commission recently proposed a rule and related amendments under the Securities Act that would permit issuers to engage in oral or written communications with potential investors that are, or are reasonably believed to be, qualified institutional buyers or institutional accredited investors, either prior to or following the filing of a registration statement, to determine whether such investors have an interest in a contemplated securities offering registered under the Securities Act.

FINRA restates and updates guidance regarding pre-inception index performance data
Morrison & Foerster LLP
  • USA
  • 09 April 2019

In a recent interpretative letter, the Financial Industry Regulatory Authority (FINRA) provided guidance to a registered broker-dealer as to the use of pre-inception index performance data relating to a proprietary index. The letter restates and updates FINRA's prior guidance as to the use of back-tested index information, including its historic position that the use of this type of information is inappropriate in communications provided to retail investors.

Determining recoverable damages following material misstatements in securities registration statements
Nagashima Ohno & Tsunematsu
  • Japan
  • 02 April 2019

If a securities registration statement contains a material misstatement, investors that acquire securities through the relevant offering can hold the issuing company liable for related damages. However, it is unclear what level of damages is recoverable if the issuing company successfully proves that the loss incurred by the investor is at least partly attributable to an unrelated factor or circumstance. A recent Supreme Court judgment has provided some clarity in this regard.

Exit strategies: registering a share transfer when target shares are encumbered by third parties
  • Romania
  • 02 April 2019

The stock market's flexibility is its greatest selling point for publicly traded companies, as it allows a fast flow of capital while still enabling majority shareholders to implement fundamental corporate changes should they wish to exit the market. However, even with all of this flexibility, shares may not always be free of other encumbrances, and the sale of such shares may be opposed by interested parties or even refused to be recognised as a genuine sale by the Trade Registry.

FINRA exam priorities and structured products
Morrison & Foerster LLP
  • USA
  • 02 April 2019

The Financial Industry Regulatory Authority (FINRA) recently issued its 2019 Risk Monitoring and Examination Priorities Letter. The letter addresses a variety of issues that all broker-dealers must address, whether they offer structured products or not. The letter clarifies that sales of complex products, including structured products, must be reviewed to see whether they comply with FINRA's suitability rules.

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