4 - principal differences between UK, EU + US regulators

what is single authorisation (passport)

a firm authorised in one participating country can provide services in another without needing full new separate authorisation

home state vs host state

home state = country where firm is originally authorised

host state = country where firm provides services in question

who allows for passportin

MiFID

what is the transparency directive

requires companies with securities traded on a regulated market to regularly disclose info to the public

3 parts to the transparency directive

minimum content in financial statements

major shareholdings

rules on disseminating + storing info

what is EMIR

european market infrastructure regulation

why was EMIR introduced

to improve transparency + reduce risk associated with the OTC derivatives market

2 main requirements under EMIR

reporting obligation for OTC derivatives —> all trades must be registered with a trade repository

CCP for all OTC derivatives drades

what does the SEC regulate

exchange traded options on currencies

equity options

4 areas of equity option that the SEC regulates

individual stocks

indice

CBOE (chicago board options exchange)

ISE (international securities exchange)

what does the SEC not regulate

futures

what is the SEC limited in regulating

derivatives

what is the CFTC

the commodity futures trading commission

what does the CFTC regulate

all futures + options products + exchanges not covered by SEC

the NFA (national futures association)

who is the NFA responsible for

firms operating in the derivatives industry

two things that the NFA says firms trading on US exchanges must do

register with the CFTC

be authorised by the NFA

what does the commodities futures modernization act 2000 stipulate

single stock + stock index futures are under the joint jurisdiction of the SEC and CFTC

what are the two parts to the CFTC part 30 prohibitions

trading for US customers on US exchanges

trading for US customers on non-US exchanges

US exchanges

trade must be through an NFA authorised firm

non-US exchanges

trade must be via a US registered firm

or

the non-US firm must have a part 30 exemption

6 parts of a part 30 exemption

UK firms must agree toL

• place funds from US clients in segregated accounts

• obtain two way risk disclosures from US clients

• abide by RIE/DIE rules and the COBS

• provide the FCA with info + access to records

• consent to join the NFA arbitration scheme

• agree to the jurisdiction in the US under the Commodity Exchange Act

the last 2 are the hardest for a firm to achieve