AI News, MFA 2018 Year in Review by managedfunds artificial intelligence

Financial Services Update, Vol. 14, Issue 4

2019 Investment Managers face seemingly ever increasing regulatory requirements, many of which are triggered at the beginning of the calendar year or an Investment Manager’s fiscal year.

under the MTA, and the Guidance proceeded to conclude that transmitting money under the MTA required fiat currency to be “transferred with or on behalf of an individual to a 3rd party, and the money transmitter must charge a fee for the transmission.”

Based on the conclusions above, DoBS found that, while Platforms facilitate transactions in virtual currencies in exchange for fiat currencies, such fiat currencies are not directly handled by the Platforms, but are instead maintained in bank accounts at depositary institutions.

Similarly, DoBS found that Kiosks, which, for a transaction fee, dispense virtual currency in exchange for fiat currency or vice versa, are not money transmitters under the MTA.

The regulatorannouncedthe launch of aconsultationon guidance that would provide clarity to market participants about which cryptoasset activities fall within the current regulatory framework.

The draft guidance divides cryptoassets into three different types of tokens: exchange tokens, security tokens, and utility tokens.

The FCA concluded that exchange tokens, which include assets that are not issued or backed by any central authority and are intended to be used as a means of exchange, usually fall outside the scope of regulation.

Security tokens, on the other hand, generally fall within the regulatory perimeter because they often have specific characteristics that meet the definition of a Specified Investment like a share or a debt instrument as set out in the Regulated Activities Order.

Finally, since they grant holders access to a current or prospective product or service, utility tokens may meet the definition of E-Money in certain circumstances, which may place some activities involving these tokens under the scope of regulation.

The FCA’s draft guidance offers a step-by-step approach to help participants determine whether certain cryptoassets fall within the current regulatory framework, including a list of factors that should be considered when evaluating whether a token is a Specified Investment and several case studies that provide practical examples of how the FCA might apply the guidance in various scenarios involving different types of tokens.

has emerged as a central hub for major cryptocurrency firms, the FCA’s work on cryptoasset regulation will likely attract the attention of market participants and regulators in other countries.

While the final guidance will establish how cryptoassets interact with current regulations, it will likely set the table for the additional regulation of digital tokens.

National Credit Review Finds Some Improvement in Credit Quality, Risk Remains Elevated in Leveraged Loans On January 25th, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced that they have released areportin which they found that risk in the portfolio of large syndicated bank loans has declined, due to improving conditions in most sectors.

Rules and New Proposed Guidance on Eligibility for Deduction for Certain Businesses On January 18th, the U.S. Department of the Treasuryannouncedthat it has issued final regulations and other guidance on a substantial provision of the Tax Cuts and Jobs Act, which allows owners of sole proprietorships, partnerships, trusts, and S corporations to deduct up to 20 percent of their qualified business income.

SIFMA’s request reflects the global impact of the European Union’s (“EU”) new rules on investment research under MiFID II, which prohibits investment banks from bundling the fees they charge clients for trading and research.

SPAC IPOs Find New Appeal During Shutdown On January 23rd, Reutersreportedthat companies looking to pursue initial public offerings (“IPOs”) during the government shutdown are turning to special purpose acquisition companies (“SPACs”) to go public.

Under the proposed legislation, the SEC would have to look at ways to change the rule so that corporate insiders are prohibited from indirectly engaging in insider trading by altering trading plans.

According to a new Brookings Institution report, approximately 36 million Americans hold jobs where 70 percent of their tasks could soon be performed by machines using current technology.

Delays Decision in Disapproval Proceedings for BOX’s Connectivity Fee Proposal On January 25th, the SEC designated March 29, 2019, as the date by which it will issue an order approving or disapproving BOX Options Exchange LLC’s (“BOX”) proposed rule change to amend the BOX fee schedule to establish certain connectivity fees and reclassify its high speed vendor feed as a port fee.SEC Release 34-84989.

Makes Recommendations for CCP Best Practices On January 24th, the International Swaps and Derivatives Association (“ISDA”)announcedthe publication of a set ofbest practicesfor central counterparties (“CCPs”), which are designed to help CCPs around the world to achieve greater consistency in their risk practices.

adapt risk controls and margin requirements to concentration, liquidity, member credit quality and wrong-way risk in a member’s portfolio;

Among other things, the Board will discuss priority areas for the MSRB’s retrospective rule review, Board outreach events for engaging with municipal market stakeholders, and concerns raised by SEC Chairman Jay Clayton about the timeliness of financial disclosures by municipal securities issuers.

Gives SEC Right to Sue Over Sale of Securities Abroad In an ongoing enforcement action, the SEC alleged that a Utah man who operated an internet traffic exchange business through his Utah-based company was involved in a Ponzi scheme related to the fraudulent sale of securities to customers who were mostly located overseas.