Posts Tagged ‘Cross-border transactions’

Toward a Global Regulatory Framework for Cross-Border OTC Derivatives Activities

Posted by Michael S. Piwowar, Commissioner, U.S. Securities and Exchange Commission, on Saturday March 22, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: Michael S. Piwowar is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on Commissioner Piwowar’s remarks at the Alternative Investment Management Association Global Policy & Regulatory Forum; the full text is available here. The views expressed in the post are those of Commissioner Piwowar and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

International engagement has long been a fundamental aspect of effective capital markets regulation. As Kathy [Casey] noted in a speech she gave while Commissioner in 2007: “If we, as regulators, are to remain effective and relevant in meeting our mission of protecting investors, fostering capital formation and maintaining competitive, fair and orderly markets, we will need to be more nimble and responsive to market developments and rely more on cooperation and collaboration with our international counterparts.” [1]

It has become clear to me over these past few months that at no time in the Commission’s history have we been more engaged with the international community or more involved in collaborative workstreams with our fellow regulators from around the globe.

…continue reading: Toward a Global Regulatory Framework for Cross-Border OTC Derivatives Activities

CFTC Issues Cross-Border Substituted Compliance Determinations

Posted by Annette L. Nazareth, Davis Polk & Wardwell LLP, on Tuesday January 28, 2014 at 9:14 am
  • Print
  • email
  • Twitter
Editor’s Note: Annette Nazareth is a partner in the Financial Institutions Group at Davis Polk & Wardwell LLP, and a former commissioner at the U.S. Securities and Exchange Commission. The following post is based on a Davis Polk client memorandum. The complete publication, including appendices, is available here.

Just one day in advance of the December 21, 2013 expiration of the CFTC’s exemptive order delaying the applicability of some CFTC swap regulations for non-U.S. swap dealers and foreign branches of U.S. swap dealers, the CFTC approved a series of comparability determinations. These comparability determinations will allow CFTC-registered non-U.S. swap dealers and foreign branches of U.S. swap dealers to comply with local requirements rather than the corresponding CFTC rules in cases where substituted compliance is available under the CFTC’s cross-border guidance. [1] The CFTC made comparability determinations for some swap dealer entity-level requirements for Australia, Canada, the European Union (the “EU”), Hong Kong, Japan and Switzerland and for a limited number of transaction-level requirements for the EU and Japan.

…continue reading: CFTC Issues Cross-Border Substituted Compliance Determinations

International Corporate Governance Spillovers

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday December 4, 2013 at 9:18 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Rui Albuquerque of the Department of Finance at Boston University; Miguel Ferreira, Professor of Finance at Nova School of Business and Economics; Luis Brandao Marques, Senior Economist at the International Monetary Fund; and Pedro Matos of the Finance Area at the University of Virginia.

In the paper, International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions, which was recently made publicly available on SSRN, we investigate whether the change in corporate control following a cross-border M&A leads to changes in corporate governance of non-target firms that operate in the same country and industry as the target firm. We focus on the strategic complementarity in governance choices between the target firm and its rival firms in the local market. We take the view that corporate governance is affected by the choice of other competing firms as in the models developed by Acharya and Volpin (2010), Cheng (2010), and Dicks (2012).

To provide guidance for our empirical analysis, we develop a simple industry oligopoly model, which captures the idea that rival firms operating in a given industry change their governance in response to competitive forces. The spillover effect occurs as firms in an industry recognize that corporate governance is used more efficiently by the target firm and therefore strengthen their own governance as a response. The model has two decision stages and builds on the work of Shleifer and Wolfenzon (2002) and Albuquerque and Wang (2008). In the first stage, outside shareholders choose firm-level governance (i.e., how much to monitor and limit of managerial private benefits), given the governance choices of other firms. In the second stage, firm managers choose output and the level of private benefits that they extract in the context of a symmetric oligopolistic industry. In the Nash equilibrium outcome, managers have an incentive to “overproduce” (because their private benefits increase with revenues) and industry-level profits are not maximized.

…continue reading: International Corporate Governance Spillovers

Cross-Border Schemes of Arrangement and Forum Shopping

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday September 9, 2013 at 9:32 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Jennifer Payne, Professor of Corporate Finance Law at University of Oxford.

The English scheme of arrangement has existed for over a century as a flexible tool for reorganising a company’s capital structure. Schemes of arrangement can be used in a wide variety of ways. In theory a scheme of arrangement can be a compromise or arrangement between a company and its creditors or members about anything which they can properly agree amongst themselves. It is common to see both member-focused schemes and creditor-focused schemes. In practice the most common schemes are those which seek to transfer control of a company, as an alternative to a takeover offer, and those which restructure the debts of a financially distressed company with a view to rescuing the company or its business.

In recent years schemes of arrangement have proved popular as a restructuring tool not only for English companies but also for non-English companies. A number of recent high profile cases have allowed non-English companies to make use of the English scheme jurisdiction to restructure their debts, including Re Rodenstock GmbH [2011] EWHC 1104 (Ch), Primacom Holdings GmbH [2012] EWHC 164 (Ch), Re NEF Telecom Co BV [2012] EWHC 2944 (Comm), Re Cortefiel SA [2012] EWHC 2998 (Ch) and Re Seat Pagine Gialle SpA [2012] EWHC 3686 (Ch). Typically, these cases involve financially distressed companies registered in another EU Member State making use of an English scheme of arrangement without moving either their seat or Centre of Main Interest (COMI). In general, the main connection to England is the senior lenders’ choice of English law and English jurisdiction as governing their lending relationship with the company.

…continue reading: Cross-Border Schemes of Arrangement and Forum Shopping

CFTC Issues Guidance Regarding Cross-Border Swaps

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday August 16, 2013 at 8:47 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Joshua Cohn, partner focusing on Derivatives & Structured Products at Mayer Brown LLP, and is based on a Mayer Brown legal update. The complete publication, including footnotes and appendices, is available here.

On July 12, 2013, the US Commodity Futures Trading Commission (“CFTC”) approved the issuance of an interpretive guidance and policy statement (the “Guidance”) regarding the cross-border application of the swaps provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Although the CFTC may continue to refine its approach to the cross-border regulation of swaps, the Guidance is intended to finalize the proposed interpretive guidance and policy statement issued on July 12, 2012 (the “Proposed Guidance”). Like the Proposed Guidance before it, the Guidance represents the CFTC’s attempt to meet its statutory mandate to (1) regulate swaps that “have a direct and significant connection with activities in, or effect on, commerce of the United States” and (2) prevent the evasion of the swaps provisions of the Dodd-Frank Act.

In brief, the Guidance: (1) defines “US person” and “non-US person,” which are key for applying the CFTC’s extraterritorial framework; (2) establishes the calculation and aggregation methodologies used for determining whether non-US persons engage in swap transactions at levels that trigger swap dealer (“SD”) or major swap participant (“MSP”) registration; (3) categorizes “Entity-Level Requirements” and “Transaction-Level Requirements” and describes their extraterritorial application; (4) discusses the “substituted compliance” framework; and (5) describes the requirements applicable to nonregistered swap participants (“Non-Registrants”).

The CFTC also issued an exemptive order (the “Order”) that effectively provides for the phased implementation of certain aspects of the Guidance. The Order, in many respects, builds upon relief granted in prior CFTC exemptive orders.

…continue reading: CFTC Issues Guidance Regarding Cross-Border Swaps

Cross-Border at the Crossroads: The SEC’s “Middle Ground”

Posted by John Ramsay, U.S. Securities and Exchange Commission, on Saturday June 1, 2013 at 9:58 am
  • Print
  • email
  • Twitter
Editor’s Note: John Ramsay is acting director of the Division of Trading and Markets at the U.S. Securities and Exchange Commission. This post is based on Mr. Ramsay’s remarks at the New York City Bar Association, available here. The views expressed in the post are those of Mr. Ramsay and do not necessarily reflect those of the Securities and Exchange Commission, the Commissioners, or the Staff.

I’d like to describe the Commission’s recent set of proposals on the cross-border regulation of derivatives. First, though, I’ll describe the state of play among international regulators, both in developing their derivatives regimes and in grappling with the thorny cross-border aspects of derivatives trading.

Status of International Regulatory Efforts

Countries are at various stages of implementing their derivatives regimes in response to the G20 commitments.

The U.S. is further along in this effort. The SEC has now proposed substantially all of the rules required by Title VII, and we have adopted the foundational definitional rules and those governing swap clearing agencies standards, among others. The CFTC is further along in the adoption mode and is on track to complete the adoption of their rules later this year.

Other jurisdictions are further behind, which means that it is difficult to assess at this point how similar their requirements may be to those that the U.S. is implementing.

…continue reading: Cross-Border at the Crossroads: The SEC’s “Middle Ground”

U.S. Insider Trading Enforcement Goes Global

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday May 26, 2013 at 10:21 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Michael Feldberg, partner and head of the U.S. litigation practice at Allen & Overy LLP. This post is based on an Allen & Overy memorandum; the full text, including footnotes, is available here.

A recent inquiry into potential insider trading in Switzerland ahead of the acquisition of H.J. Heinz Company has drawn attention to the role of U.S. regulators in policing suspicious trading activities that take place outside of the United States. While the Heinz matter has attracted significant media attention, it is only the latest in a string of similar cross-border inquiries and enforcement actions undertaken recently by the U.S. Securities and Exchange Commission (SEC). As these matters demonstrate, the SEC has in recent years shown an increasing willingness to pursue insider trading enforcement actions with substantial international dimensions. In the words of former SEC Enforcement Chief Robert Khuzami, “offshore trading is not off-limits to U.S. law enforcement.”

Historically, many of the SEC’s insider trading cases with international angles were simply the outgrowth of cases that were primarily domestic in nature. In recent years, however, a number of the SEC’s insider trading matters have involved significant overseas conduct (e.g., foreign traders operating through foreign accounts) and consequently a high number of foreign defendants. In many of these matters, the jurisdictional nexus between the suspicious conduct and the U.S. market is increasingly attenuated (including at least one recent example in which the sole basis appears to have been that a particular securities transaction was cleared through a U.S. brokerage account). While individuals or firms who choose to litigate insider trading cases against the SEC may be able to raise defenses to the SEC’s arguably extraterritorial exercise of its jurisdiction under certain factual scenarios, the mere prospect of an SEC investigation – including significant legal costs and corresponding reputational impact – should cause internationally active firms to take note of the breadth and intensity of the SEC’s focus on cross-border insider trading matters.

…continue reading: U.S. Insider Trading Enforcement Goes Global

SEC Publishes Proposed Rules Regarding Cross-Border Security-Based Swap Transactions

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday May 24, 2013 at 9:21 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Robert Buckholz, partner and co-coordinator of the Corporate and Finance Group at Sullivan & Cromwell LLP, and is based on a Sullivan & Cromwell publication.

Yesterday the Securities and Exchange Commission (“SEC”) proposed rules and interpretive guidance regarding the application of the U.S. regulatory regime to cross-border security-based swap (“SBS”) transactions. The proposals also address the impact of cross-border SBS transactions on the registration obligations of security-based swap dealers (“SBSDs”), major security-based swap participants (“MSBSPs”), SBS clearing agencies, SBS execution facilities and SBS swap data repositories (“SDRs”).

The proposed rules also would establish a framework of “substituted compliance” under which certain participants in the SBS market may comply with non-U.S. regulatory regimes that the SEC determines to be comparable with U.S. requirements, in lieu of the rules that would otherwise apply to these participants. The proposed rules will be open for comment for 90 days after the date of their publication in the Federal Register.

The SEC separately voted to reopen, for 60 days, the comment period for all rules relating to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) that are not yet final. This 60-day comment period also applies to the related SEC policy statement describing the expected order for these rules to take effect.

The proposing release is more than 600 pages long and requests public comment on numerous topics. This post provides a preliminary outline of a few key aspects of the proposals. We will publish a more detailed memorandum on the proposed rules and interpretive guidance shortly.

…continue reading: SEC Publishes Proposed Rules Regarding Cross-Border Security-Based Swap Transactions

Regulation in a Global Financial System

Posted by Mary Jo White, Chair, U.S. Securities and Exchange Commission, on Friday May 10, 2013 at 9:52 am
  • Print
  • email
  • Twitter
Editor’s Note: Mary Jo White is Chair of the U.S. Securities and Exchange Commission. This post is based on Chair White’s remarks at the Investment Company Institute (ICI) General Membership Meeting, which are available here. The views expressed in this post are those of Chair White and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

It should rapidly become clear that my remarks belong only to me because I will be talking about the role of the SEC in an increasingly global financial and regulatory system from the viewpoint of a Chair on Day 18 of her tenure. Already, I find myself emphasizing to some outside the agency that the international aspect of the SEC’s role is not a distraction from our important core domestic duties. Rather, that role must be understood in order to fully appreciate the agency’s whole mission – to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation.

And it’s how we’re furthering that mission through our international efforts that I will speak about today.

…continue reading: Regulation in a Global Financial System

Regulation of Cross-Border OTC Derivatives Activities: Finding the Middle Ground

Posted by Elisse Walter, Commissioner, U.S. Securities and Exchange Commission, on Wednesday April 24, 2013 at 9:29 am
  • Print
  • email
  • Twitter
Editor’s Note: Elisse B. Walter is a Commissioner at the U.S. Securities and Exchange Commission and was the Chairman of the SEC from December 2012 to April 2013. This post is based on Commissioner Walter’s recent remarks at the American Bar Association Spring meeting, available here. The views expressed in this post are those of Commissioner Walter and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

Today at the SEC and in government agencies around the world, regulators are shaping the rules that will govern the way over-the-counter derivatives are transacted. It’s a crucial task given the magnitude and importance of this market to the international financial system.

In the process, all of us are grappling with the fact that these transactions rarely respect national boundaries. They are complex transactions that routinely cross borders, and are potentially subject to multiple sets of rules.

To ensure our regimes work effectively, we need to have a common sense, flexible approach to the cross-border regulation of derivatives.

…continue reading: Regulation of Cross-Border OTC Derivatives Activities: Finding the Middle Ground

Next Page »
 
  •  » A "Web Winner" by The Philadelphia Inquirer
  •  » A "Top Blog" by LexisNexis
  •  » A "10 out of 10" by the American Association of Law Librarians Blog
  •  » A source for "insight into the latest developments" by Directorship Magazine