November 18, 2018

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CFTC and Monetary Authority of Singapore Sign Arrangement To Cooperate on FinTech Innovations & NFA Issues Notice of Effective Date for Amendments to Security Futures Contracts’ Risk Disclosure Statement

CFTC and Monetary Authority of Singapore Sign Arrangement To Cooperate on FinTech Innovations 

On September 13, the Commodity Futures Trading Commission issued Release 7784-18, announcing that the CFTC and the Monetary Authority of Singapore signed the Cooperation Arrangement on Financial Technology Innovation (FinTech Arrangement) on September 13. The FinTech Arrangement supports both authorities’ efforts to facilitate FinTech development and innovation in their respective markets by focusing on information sharing on FinTech market trends and developments. This includes sharing insights derived from each authority’s relevant FinTech sandbox, proofs of concept and innovation competitions. The FinTech Arrangement also facilitates referrals of FinTech companies interested in entering the other’s market. This will help FinTech companies better understand and navigate the regulatory regime and capitalize on opportunities in each jurisdiction.

Release 7784-18 is available here.

NFA Issues Notice of Effective Date for Amendments to Security Futures Contracts’ Risk Disclosure Statement

On September 12, the National Futures Association issued Notice I-18-15, announcing that the amendments to NFA’s Interpretive Notice entitled NFA Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures Contracts (Interpretive Notice) will become effective on October 12.

NFA Compliance Rule 2-30(b) requires members and associates who are registered as brokers or dealers under Section 15(b)(11) of the Securities Exchange Act of 1934 to provide a risk disclosure statement for security futures products (SFP) to a customer at or before the time the member approves the account to trade SFPs. This statement describes the characteristics and risks of SFPs.

The amendments to the Interpretive Notice were submitted to the Commodity Futures Trading Commission on June 7 and August 21. The June 7 amendment changes the normal clearance and settlement cycle for securities transactions from three (3) business days to two (2) business days with respect to clearing a broker’s settlement with the National Securities Clearing Corporation. The August 21 amendment changes the cash portion of a customer’s account that the Securities Investor Protection Corporation (SIPC) will cover from $100,000 to $250,000. The SIPC covers assets of its customer’s members, up to $500,000, in the event that the broker-dealer holding those assets becomes insolvent.

Notice I-18-15 is available here.

The June 7 proposed amendment is available here.

The August 21 proposed amendment is available here.

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About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm
Partner

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

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312-902-5372
Timothy Nolan, Katten Law Firm, Chicago, Corporate Law Attorney
Associate

Timothy Nolan concentrates his practice on transactional, corporate and regulatory aspects of financial services matters. Timothy is able to provide legal services to a wide variety of clients, including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Timothy served as the CEO and the president of the board of directors of a small commercial real estate company and spent 10 years in the scrap recycling industry, including several years as general manager of a mid-sized company. In his time in the scrap recycling industry, Timothy worked with traders, brokers, importers and exporters, and other industry professionals around the world relating to ferrous, non-ferrous and precious metal recycling, together with paper and plastic recycling.

312-902-5447