Securities

SEC Chairman Mary Schapiro last week issued a statement indicating that the SEC would not move forward with proposals for structural reform of money market funds. The SEC had been considering requiring funds to maintain minimum capital levels, or alternatively to have a floating net asset value and mark-to-market accounting. In light of the opposition to the proposals of three of the five Commissioners, Chairman Schapiro decided to end her efforts to advance structural reform.

IOSCO has published a consultation paper on exchange traded funds (ETFs). The paper proposes common investor-protection principles or guidelines on ETFs. The report also discusses market structure and financial stability issues. The proposed principles have been developed to provide guidance for markets and market authorities. The paper is in part a response to the "flash crash", a severe drop in financial markets prices on May 6, 2010, including a 5% drop in the S&P 500 index occurring in just a few minutes. ETFs were disproportionately affected by the “flash crash.”

Meredith Cross, Director, Division of Corporation Finance of the SEC, made a speech last week suggesting the SEC may substantially revise the 1934 Act reporting regime for foreign private issuers, or at least those for which the U.S. is the main market:

Dodd-Frank includes several provisions that potentially raise issues for securitizations of assets outside the United States. Regulators are currently evaluating comments received on the various regulatory proposals they have issued to implement Dodd-Frank's statutory provisions. This series of blog posts will note some of the more significant issues raised by these regulatory proposals for securitizations outside the United States, starting with the 5% risk retention requirement of Dodd-Frank Section 941.

Regulators in the United States are writing rules to implement the Dodd-Frank legislation, including rules that will determine how broadly the law will apply to activity outside the United States. Japanese and other foreign financial institutions should take advantage of this opportunity to influence the regulations, because the consequences will be very important to them, and change will be much easier to accomplish now than it will be in the future.