The SEC settled administrative proceedings against an SEC-registered broker-dealer, based in Toronto, Ontario, and two individuals who were its co-founders, co-owners and CEO and Vice President, finding that the individuals failed reasonably to supervise certain associated persons who were day traders, and who had repeatedly used the firm’s order management system to engage in a manipulative trading practice known as "layering" on U.S. securities markets. Layering. According to the Order, "layering" occurs when a trader creates a false appearance of market activity by entering multiple non-

The CFTC's Division of Swap Dealer and Intermediary Oversight ("DSIO") issued the attached time-limited no-action letter providing relief for persons engaging in floor trader activities. During that limited time period, DSIO will not recommend that the CFTC take an action against an entity for failure to include, in its calculation of the aggregate gross notional amount of swaps connected with its swap dealing activity for purposes ofCFTC Rule 1.3(ggg)(4), a swap that is submitted for clearing to a registered derivatives clearing organization, provided that: the entity does not have a

The CFTC's Division of Market Oversight ("DMO") issued the attached no-action letter providing time-limited relief to SDs and MSPs from the obligation to report swap data under CFTC Rules Part 45 (Swap Data Recordkeeping and Reporting Requirements) for cleared credit default swaps ("CDS") that are entered into pursuant to a derivatives clearing organization's ("DCO") rules related to its price submission process for determining end-of-day settlement prices for cleared CDS. The no-action letter provides that the DMO will not recommend that the CFTC take action against a reporting counterparty

The attached study, conducted by the Staff of the SEC, examines the Exchange Act Section 15E(w) ("Registration of nationally recognized statistical rating organizations"), the credit ratings system and potential alternatives to that system. The study also discusses existing Exchange Act Rule 17g-5 ("Conflicts of interest"), which is intended to mitigate the issuer-pay conflict with respect to structured finance products. The report does not make any definitive recommendations, but it does provide an easy-to-read description of the way that ratings are assigned, potential conflicts of interest

The SEC issued an order granting conditional exemptive relief from compliance with certain provisions of the Exchange Act in connection with a program to commingle and portfolio margin customer positions in cleared credit default swaps, which include both "swaps" and "security-based swaps," in a segregated account. The order is necessary due to the two-track regime in the United States for the treatment of derivatives based on securities. (See related story: House Democrats Frank and Capuano Push for SEC-CFTC Merger Bill (with Lofchie Comment).) "Security-based swaps," which are also