DOCSLIB.ORG

Notice of Filing of a Proposed Rule Change Relating to Security-Based Swaps

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Notice of Filing of a Proposed Rule Change Relating to Security-Based Swaps SECURITIES AND EXCHANGE COMMISSION (Release No. 34-91789; File No. SR-FINRA-2021-008) May 7, 2021 Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to Security-Based Swaps Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)1 and Rule 19b-4 thereunder,2 notice is hereby given that on April 26, 2021, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rules 0180, 4120, 4210, 4220, 4240 and 9610 to clarify the application of its rules to security-based swaps (“SBS”) following the SEC’s completion of its rulemaking regarding SBS dealers (“SBSDs”) and major SBS participants (“MSBSPs”) (collectively, “SBS Entities”). The text of the proposed rule change is available on FINRA’s website at http://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 1 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).3 Title VII of the Dodd-Frank Act, entitled the “Wall Street Transparency and Accountability Act of 2010,”4 established a comprehensive new regulatory framework for over-the-counter (“OTC”) derivatives known in the industry as “swaps,” which were generally unregulated in the United States prior to passage of the Dodd-Frank Act. Among other things, Title VII of the Dodd-Frank Act was intended to implement in the United States the mandate agreed by the G20 in September 2009 for its members to improve the OTC derivatives markets by improving transparency, mitigating systemic risk and protecting against market abuse.5 3 Pub. L. No. 111-203, 124 Stat. 1376 (2010). 4 See Dodd-Frank Act Section 701. 5 See G20 Leaders’ Statement from The Pittsburgh Summit (Sept. 24–25, 2009), https://www.treasury.gov/resource-center/international/g7- g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf. 2 Generally, Title VII of the Dodd-Frank Act divided regulatory jurisdiction over swap products between the Commodity Futures Trading Commission (“CFTC”) and the SEC, with the CFTC regulating “swaps” and the SEC regulating SBS.6 The Dodd-Frank Act directed the SEC to promulgate rulemakings implementing the new regulatory framework for SBS, including rules requiring SBS Entities to register with the SEC; business conduct and supervision requirements, risk mitigation techniques and other rules specifically applicable to SBS Entities; recordkeeping and financial reporting rules for SBS Entities; capital, margin and segregation requirements for SBS Entities; rules requiring regulatory reporting and public dissemination of SBS information; and processes to require SBS to become subject to mandatory clearing and execution on a registered or exempt execution facility or exchange.7 The Commission has now finalized a majority of its rulemakings pursuant to Title VII of the Dodd-Frank Act (the “Title VII rulemakings”).8 The Commission has also established the compliance date for registration of 6 The terms “swap” and “security-based swap” are defined in Sections 721 and 761 of the Dodd-Frank Act. The Commission and the CFTC have jointly promulgated rules further defining these terms. See Securities Exchange Act Release No. 67453 (July 18, 2012), 77 FR 48208 (August 13, 2012) (Further Definition of “Swap,” “Security-Based Swap,” and “Security-Based Swap Agreement”; Mixed Swaps; Security-Based Swap Agreement Recordkeeping) (“Product Definitions”). Very generally, SBS are swaps referencing a single security or loan, or a narrow-based security index. Certain products sharing characteristics of both swaps and SBS are regulated as “mixed swaps” subject to both CFTC and SEC jurisdiction. 7 See Dodd-Frank Act Section 763. 8 See Securities Exchange Act Release No. 74244 (February 11, 2015), 80 FR 14564 (March 19, 2015) (Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information) (“Regulation SBSR Release”); Securities Exchange Act Release No. 75611 (August 5, 2015), 80 FR 48964 (August 14, 2015) (Final Rule: Registration Process for Security-Based Swap Dealers and Major Security-Based Swap Participants) (“Registration Process Release”); Securities Exchange Act Release No. 77617 (April 14, 2016), 81 FR 29960 (May 13, 2016) (Final Rule: Business Conduct Standards for Security- Based Swap Dealers and Major Security-Based Swap Participants) (“Business Conduct Standards Release”); Securities Exchange Act Release No. 78011 (June 8, 2016), 81 FR 39808 (June 17, 2016) (Final Rule: Trade Acknowledgment and 3 SBS Entities, which will be October 6, 2021 (the “Registration Compliance Date”), and has broadly coordinated the compliance date for a number of other Title VII rulemakings with the Registration Compliance Date.9 Accordingly, beginning on October 6, 2021, registered SBS Entities will become subject to the Title VII rulemakings, and the deadline for the initial wave of SBS Entity registrations is November 1, 2021.10 Verification of Security-Based Swap Transactions) (“Trade Acknowledgment and Verification Release”); Securities Exchange Act Release No. 86175 (June 21, 2019), 84 FR 43872 (August 22, 2019) (Final Rule: Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security- Based Swap Participants and Capital and Segregation Requirements for Broker- Dealers) (“Capital, Margin, and Segregation Release”); Securities Exchange Act Release No. 87005 (September 19, 2019), 84 FR 68550 (December 16, 2019) (Final Rule: Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based Swap Participants, and Broker-Dealers) (“Recordkeeping Release”); Securities Exchange Act Release No. 87780 (December 18, 2019), 85 FR 6270 (February 4, 2020) (Final Rules; Guidance: Rule Amendments and Guidance Addressing Cross-Border Application of Certain Security-Based Swap Requirements) (“Cross-Border Release”); Securities Exchange Act Release No. 87782 (December 18, 2019), 85 FR 6359 (February 4, 2020) (Final Rule: Risk Mitigation Techniques for Uncleared Security-Based Swaps) (“Risk Mitigation Release”). The SEC has also proposed, but not yet finalized, rules governing SBS execution facilities (“SBSEFs”) and rules regarding fraud in the SBS market. See Securities Exchange Act Release No. 63236 (November 3, 2010), 75 FR 68560 (November 8, 2010) (Prohibition Against Fraud, Manipulation, and Deception in Connection with Security-Based Swaps; Proposed Rule); Securities Exchange Act Release No. 63825 (February 2, 2011), 76 FR 10948 (February 28, 2011) (Registration and Regulation of Security-Based Swap Execution Facilities; Proposed Rule; Proposed Interpretation). 9 See Cross-Border Release supra note 8, at 6345. The Commission stated that the Registration Compliance Date for SBS Entities will be 18 months after the effective date of the rules adopted pursuant to the Cross-Border Release, which was April 6, 2020. See Cross-Border Release at 6270. Generally, the other Title VII rulemakings will apply to SBS Entities upon registration with the SEC. The first compliance date for SBS reporting under Regulation SBSR will be the first Monday that is the later of (1) six months after the date on which the first SBS data repository (“SBSDR”) that can accept reports in a given asset class registers with the SEC and (2) one month after the Registration Compliance Date. See Cross-Border Release at 6346. No SBSDRs are currently registered with the SEC. 10 The Registration Compliance Date is October 6, 2021. The SEC has also clarified that the transitional period before a person that is deemed to be an SBSD must register with 4 Title VII of the Dodd-Frank Act also amended the definition of “security” under the Act to expressly encompass SBS.11 Therefore, in addition to the comprehensive new SBS-specific regulatory framework discussed above, SBS are now also defined as securities under the Act and the rules thereunder. This amendment to the Act was effective as of July 16, 2011, the effective date of Title VII of the Dodd-Frank Act. However, to allow sufficient time to consider the potentially complex interpretive issues that may arise by defining SBS as securities, the SEC issued a series of temporary exemptive orders beginning in July 2011.12 With limited exceptions, the SEC’s temporary exemptive orders relating to the regulation of SBS as securities have now expired or will expire on the Registration Compliance Date.13 the SEC runs until two months after the end of the month in which the person is no longer able to satisfy the de minimis exception from the SBSD definition. Therefore, entities exceeding the de minimis threshold on the first counting date of August 6, 2021 or later in August 2021 must register no later than November 1, 2021. See SEC, Key Dates for Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants, https://www.sec.gov/page/key-dates-registration-security-based-swap- dealers-and-major-security-based-swap-participants (“SEC Transitional Period Guidance”).
Load more

Recommended publications
  • Dividend Swap Indices
    cover for credit indices.qxp 14/04/2008 13:07 Page 1 Dividend Swap Indices Access to equity income streams made easy April 2008 BARCAP_RESEARCH_TAG_FONDMI2NBUR7SWED The Barclays Capital Dividend Swap Index Family Equity indices have been the most essential of measurement tools for all types of investors. From the intrepid retail investor, to the dedicated institutional devotees of modern portfolio theory, the benchmarks of the major stock markets have served as the gauge of collective company price performance for decades, and have been incorporated as underlying tradable reference instruments in countless financial products delivering stock market returns. In most cases, equity indices are available as price return or total return, the latter being, broadly speaking, a blend of the return derived from stock price changes, as well as the receipt of dividends paid out to holders of the stock. The last few years have seen the rapid growth of a market in stripping out the dividend return and trading it over the counter through dividend swaps – a market that has so far been open to only the most sophisticated investors, allowing them to express views on the future levels of dividend payments, hedge positions involving uncertainty of dividend receipts and implement trades that profit from the relative value between one stream of dividend payments and another. The Barclays Capital Dividend Swap Index Family opens this market up to investors of all kinds. The indices in the family track the most liquid areas of the dividend swap market, thereby delivering unprecedented levels of transparency and access to a market that has grown to encompass the FTSE™, S&P 500, DJ Euro STOXX 50® and Nikkei 225 and in which the levels of liquidity that have been reached are estimated to be in the order of hundreds of millions of notional dollars per day.
    [Show full text]
  • Section 108 (Mar
    NEW YORK STATE BAR ASSOCIATION TAX SECTION REPORT ON SECTION 871(m) March 8, 2011 TABLE OF CONTENTS PAGE Introduction........................................................................................................... 1 I. Summary of Section 871(m)..................................................................... 2 II. Issues with Section 871(m) ....................................................................... 5 A. PolicyBasis for Section 871(m)....................................................... 5 B. TerminologyIssues ........................................................................ 14 1. What Is a “Notional Principal Contract”?......................... 14 2. What Is “Readily Tradable on an Established Securities Market”? ........................................................................... 16 3. What Is a “Transfer”? ....................................................... 19 4. What Is an “Underlying Security”? .................................. 21 5. What Is “Contingent upon, or Determined by Reference to”?.................................................................................... 23 6. What Is a “Payment”?....................................................... 24 7. When Is a Payment “Directly or Indirectly” Contingent upon or Determined by Reference to a U.S.-Source Dividend?.......................................................................... 26 C. Ancillary/Scope Issues .................................................................. 26 1. When Are “Projected” or “Assumed” Dividend
    [Show full text]
  • European Tracker of Financing Measures
    20 May 2020 This publication provides a high level summary of the targeted measures taken in the United Kingdom and selected European jurisdictions, designed to support businesses and provide relief from the impact of COVID-19. This information has been put together with the assistance of Wolf Theiss for Austria, Stibbe for Benelux, Kromann Reumert for Denmark, Arthur Cox for Ireland, Gide Loyrette Nouel for France, Noerr for Germany, Gianni Origoni, Grippo, Capelli & Partners for Italy, BAHR for Norway, Cuatrecasas for Portugal and Spain, Roschier for Finland and Sweden, Bär & Karrer AG for Switzerland. We would hereby like to thank them very much for their assistance. Ropes & Gray is maintaining a Coronavirus resource centre at www.ropesgray.com/en/coronavirus which contains information in relation to multiple geographies and practices with our UK related resources here. JURISDICTION PAGE EU LEVEL ...................................................................................................................................................................................................................... 2 UNITED KINGDOM ....................................................................................................................................................................................................... 8 IRELAND ....................................................................................................................................................................................................................
    [Show full text]
  • A-Cover Title 1
    Barclays Capital | Dividend swaps and dividend futures DIVIDEND SWAPS AND DIVIDEND FUTURES A guide to index and single stock dividend trading Colin Bennett Dividend swaps were created in the late 1990s to allow pure dividend exposure to be +44 (0)20 777 38332 traded. The 2008 creation of dividend futures gave a listed alternative to OTC dividend [email protected] swaps. In the past 10 years, the increased liquidity of dividend swaps and dividend Barclays Capital, London futures has given investors the opportunity to invest in dividends as a separate asset class. We examine the different opportunities and trading strategies that can be used to Fabrice Barbereau profit from dividends. +44 (0)20 313 48442 Dividend trading in practice: While trading dividends has the potential for significant returns, [email protected] investors need to be aware of how different maturities trade. We look at how dividends Barclays Capital, London behave in both benign and turbulent markets. Arnaud Joubert Dividend trading strategies: As dividend trading has developed into an asset class in its +44 (0)20 777 48344 own right, this has made it easier to profit from anomalies and has also led to the [email protected] development of new trading strategies. We shall examine the different ways an investor can Barclays Capital, London profit from trading dividends either on their own, or in combination with offsetting positions in the equity and interest rate market. Anshul Gupta +44 (0)20 313 48122 [email protected] Barclays Capital,
    [Show full text]
  • BEW Back End Sept02
    Offering Circular Offering Challenger Bank Endowment Warrants Fully covered Endowment Warrants are offered over shares in: Australia and New Zealand Banking Group Limited Commonwealth Bank of Australia Limited National Australia Bank Limited Westpac Banking Corporation Issuer: Challenger Equities Limited (ABN 45 009 568 503) Issue Date: 16 September 2002. Expiry 15 October 2003. Funds Management Contents Introducing Challenger Bank Endowment Warrants 2 Notice to Investors 9 1 – General Features 11 2 – Description of the Endowment Warrants 12 3 – Risk Factors Relating to the Endowment Warrants 17 4 – Description of the Underlying Financial Instrument: The Companies 21 5 – Tax Considerations 22 6 – Terms of Issue 26 7 – Description of the Issuer 43 8 – Interpretation 45 Application Forms 49 The Offer Challenger Bank Endowment Warrants are being offered in a series over shares in: Underlying Share ASX Code Australia and New Zealand Banking Group (ANZ) ANZEEA Commonwealth Bank of Australia (CBA) CBAEEA National Australia Bank (NAB) NABEEA Westpac Banking Corporation (WBC) WBCEEA Timetable Date of Offering Circular 16 September 2002 Offer Period Opens 16 September 2002 Offer Period Closes 15 October 2003 Maturity Date 15 February 2012 Dear Investor Challenger launched the award winning Endowment Warrant concept in 1996 – including, amongst others, Endowment Warrants over the ‘Top 4’ banks. Those Bank Endowment Warrants have performed exceptionally well over the past six years, on average returning 580%*. We are delighted to offer you the opportunity to participate in this outstanding investment potential through a series of Bank Endowment Warrants over ANZ, CBA, NAB and WBC shares expiring in 2012. These shares have been chosen based on their historical performance record and suit investors seeking long-term leveraged exposure to the banking sector.
    [Show full text]
  • Equity Derivatives Neil C Schofield Equity Derivatives
    Equity Derivatives Neil C Schofield Equity Derivatives Corporate and Institutional Applications Neil C Schofield Verwood, Dorset, United Kingdom ISBN 978-0-230-39106-2 ISBN 978-0-230-39107-9 (eBook) DOI 10.1057/978-0-230-39107-9 Library of Congress Control Number: 2016958283 © The Editor(s) (if applicable) and The Author(s) 2017 The author(s) has/have asserted their right(s) to be identified as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988. This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or informa- tion storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made.
    [Show full text]
  • On the Timing and Pricing of Dividends
    THE MILTON FRIEDMAN INSTITUTE FOR RESEARCH IN ECONOMICS MFI Working Paper Series No. 2010-010 On the Timing and Pricing of Dividends Jules H. van Binsbergen Northwestern Kellogg, Stanford GSB and NBER Michael W. Brandt Duke University and NBER Ralph S.J. Koijen Chicago Booth School of Business and NBER October 2010 1126 East 59th Street Chicago, Illinois 60637 T: 773.702.7587 F: 773.795.6891 [email protected] On the Timing and Pricing of Dividends∗ Jules H. van Binsbergen† Michael W. Brandt‡ Ralph S.J. Koijen§ Northwestern Kellogg Duke University Chicago Booth and Stanford GSB and NBER and NBER and NBER This version: October 2010 Abstract We recover prices of dividend strips on the aggregate stock market using data from derivatives markets. The price of a k-year dividend strip is the present value of the dividend paid in k years. The value of the stock market is the sum of all dividend strip prices across maturities. We study the properties of strips and find that expected returns, Sharpe ratios, and volatilities on short-term strips are higher than on the aggregate stock market, while their CAPM betas are well below one. Short-term strip prices are more volatile than their realizations, leading to excess volatility and return predictability. ∗First draft: June 2009. We are grateful to Ravi Bansal, Robert Battalio, Alessandro Beber, John Campbell, John Cochrane, George Constantinides, Zhi Da, Peter DeMarzo, Joost Driessen, Darrell Duffie, Pengjie Gao, John Heaton, Xavier Gabaix, Nicolae Garleanu, Lars Hansen, Otto van Hemert, Mark Hendricks,
    [Show full text]
  • How to Report Transactions on OTC Derivative Instruments
    COMMITTEE OF EUROPEAN SECURITIES REGULATORS Date: 8 October 2010 Ref.: CESR/10-661 GUIDANCE How to report transactions on OTC derivative instruments CESR, 11-13 avenue de Friedland, 75008 Paris, France - Tel +33 (0)1 58 36 43 21, web site: www.cesr.eu Table of contents Glossary ..................................................................................................................................................3 I. Introduction ...............................................................................................................................4 A. Transaction reporting in Europe ..................................................................................................4 B. The Transaction Reporting Exchange Mechanism.......................................................................4 C. CESR work on the field of transaction reporting on OTC derivative instruments ......................4 D. Scope of Transaction Reporting on OTC derivative instruments .................................................4 E. The transaction reporting fields ...................................................................................................5 F. Population of fields per type of derivative ....................................................................................9 G. Reportable changes and events ....................................................................................................9 II. OTC options.............................................................................................................................
    [Show full text]
  • Valuation Adjustments 6 Ntnze
    0 0 ·~rf'J. ·~> ·~Q Q) 8 0 u 0 ~ ~ Q) ~ ·~ ~ t 0 ~ Q) ~ ~ 0 ~ ~ ~ 0 ~ u ~ ·s:t:::: .0 fJl Od 00 b ...... 0 ~ W,o c:: 0 0 co 0 ~ :iQ 0 :::. ·~ @ Ql ~ ~ .;:: ~ $: ~ ~ ~ ~ .D ~ ro Cl) > ~ ~ LBEX-WGM 002234 CONFIDENTIAL TREATMENT REQUESTED BY LEHMAN BROTHERS HOLDINGS, INC. t""'('l rn~ ~~ ~ti ~~ t:l:i>-l ~> Contents >-lt""" :::r:...., I [/).>~G; :::r:...., 1. Executive Summary 3-5 0~ t""'tn z....,oz @G; "!0 JL Valuation Adjustments 6 ntnze . [/)....., Significant Changes 7 0 Summary 8 ~ Regional Matrix 9 Americas 10- 11 Europe 12-13 Asia 14-15 Monthly Changes 16-17 UL Pricing Report 18 r Explanation of Significant Variances 19-23 m m >< Coverage 24-25 Projects 26-28 :s:~ 0 0 1\.) 1\.) (.,) 0'1 LEHlvfAN BROTHERS 2 t""'('l rn~ ~~ ~ti ~~ t:l:i>-l ~> Executive summary >-lt""" :::r:...., Complex Derivatives Transaction Review Committee [/).>~G; :::r:...., This committee, consisting of Capital Market Finance, Accounting Policy and Model Validation personnel, was set up in April 2005 and meets to 0~ t""'tn consider any significant derivative transactions undertaken. The committee considers whether the transactions are being booked, valued and z....,oz modeled appropriately. Furthermore, the committee determines whether the proper accounting treatment is being applied. During the month, the @G; following transactions were reviewed: "!0 ntnze . [/)....., -----+Emerging Market Loan with FX Call Spread- Lehman loaned ¥6 billion to Astana, a Kazakhstan quasi-sovereign entity. In addition, Lehman entered into a currency swap with Astana to convert the JPY loan into USD. Lehman also purchased a FX call spread from 0 Astana.
    [Show full text]
  • Notice of Proposed Rule Change Relating to the Listing and Trading
    SECURITIES AND EXCHANGE COMMISSION (Release No. 34-72014; File No. SR-NASDAQ-2014-038) April 24, 2014 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Proposed Rule Change Relating to the Listing and Trading of the Shares of the Reality Shares NASDAQ-100 Isolated Dividend Growth Index ETF of the Reality Shares ETF Trust Under Rule 5705 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 and Rule 19b-4 thereunder,2 notice is hereby given that on April 10, 2014, The NASDAQ Stock Market LLC (“NASDAQ” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by NASDAQ. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASDAQ proposes to list and trade the shares of the Reality Shares NASDAQ-100 Isolated Dividend Growth Index ETF (the “Fund”) of the Reality Shares ETF Trust (the “Trust”) under Rule 5705 (Exchange Traded Funds: Portfolio Depository Receipts and Index Fund Shares).3 The shares of the Fund are collectively referred to herein as the “Shares.” The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at NASDAQ’s principal office, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 The Commission approved NASDAQ’s Rule 5705, as well as Rule 5735 regarding managed fund shares, in Securities Exchange Act Release No.
    [Show full text]
  • Disclosure Annex for Equity Derivative Transactions
    International Swaps and Derivatives Association, Inc. Disclosure Annex for Equity Derivative Transactions This Annex supplements and should be read in conjunction with the General Disclosure Statement. NOTHING IN THIS ANNEX AMENDS OR SUPERSEDES THE EXPRESS TERMS OF ANY TRANSACTION BETWEEN YOU AND US OR ANY RELATED GOVERNING DOCUMENTATION. Accordingly, descriptions in this Annex of the operation of Equity Transactions (as defined below) and the consequences of various events are in all cases subject to the actual terms of an Equity Transaction executed between you and us and its governing documentation (whether or not such qualification is expressly stated). We refer to Transactions in which the Underliers are corporate equity securities or baskets or indexes of equity securities as “Equity Transactions”. The terms of an Equity Transaction may incorporate standard definitions, master confirmations, transaction matrices and other market standard terms, which may in turn be amended or customized pursuant to the terms of the Equity Transaction and its governing documentation. Before entering into an Equity Transaction, you should obtain and review carefully any such materials incorporated by reference as their content could materially affect your rights and obligations under the Equity Transaction, its value and its appropriateness for your particular objectives. Valuation of Underliers Trading of equity securities typically takes place on securities exchanges, dealer quotation systems, electronic communications networks, and other trading facilities and execution venues, the regulation of which may differ from jurisdiction to jurisdiction. Futures and option contracts related to equity securities and indexes may trade on futures exchanges, securities exchanges or other derivatives exchanges, depending on the type of contract.
    [Show full text]
  • April 6, 2012 Via Electronic Filing: Internal Revenue Service CC:PA
    April 6, 2012 Via Electronic Filing: Internal Revenue Service CC:PA:LPD:PR (REG–120282–10), Room 5203 P.O. Box 7604 Ben Franklin Station Washington D.C. 20044 Re: MFA Comments IRS REG–120282–10, Dividend Equivalents from Sources within the United States Dear Ladies and Gentlemen: Managed Funds Association (“MFA”)1 appreciates the opportunity to respond to IRS Reg 120282-10, Dividend Equivalents from Sources within the United States (the “Proposed Regulation”), which provide guidance regarding tax withholding obligations in connection with certain financial products that provide for payments that are contingent upon or determined by reference to payments of dividends from sources within the United States. MFA and its members support the policy underlying the Proposed Regulation of preventing abusive practices designed to evade U.S. taxes. As discussed below, we are concerned that certain provisions in the Proposed Regulation go far beyond addressing the primary concern underlying the relevant provisions of the Hiring Incentives to Restore Employment Act (the “HIRE Act”), applying appropriate withholding taxes on certain equity-linked derivatives instruments that pose risks of inappropriate tax avoidance, and also introduce uncertainty and risk for market participants, which may drive many out of the market altogether. As a general matter, market participants need reasonable certainty when entering into transactions that they understand the economics of the trade. It is also important that the final regulations establish rules that will allow market participants to be able to make reasonable contractual representations that likely will be required by their counterparties. 1 MFA is the voice of the global alternative investment industry.
    [Show full text]