By Stephen A. Keen and Andrew P. Cross

Subject to Steve’s caveat regarding the definition of an “unfunded commitment agreement,” we continue our exploration of Rule 18f-4 with a focus on the treatment of such commitments under paragraph (e) of the new rule. Like paragraph (d), (e) applies only to business development companies, closed-end funds and open-end funds other than money market funds (“Funds”). We begin with a conceptual question: how can a contract to lend money and a contract to repay borrowed money both be “senior securities” under Section 18?

Read the full blog post at The Asset Management ADVocate.

In Episode 4 of our Podcast Series, Todd Zerega and Andrew Cross discuss the use of derivatives on cryptocurrencies by institutional investors. Specific attention is given to regulatory and product development considerations for registered investment advisors and fund sponsors, as well as technical considerations related to exchange-traded futures on bitcoin and other similar listed products.

As a supplement to the podcast, please see our recent blog post about the CFTC’s publication of weekly data about the volume of bitcoin futures trading and types of market participants that are entering into these trades.

Good day.  Good to learn about new products. DR2

By Stephen A. Keen

This is the seventh installment of Andrew Cross and my review of the compliance requirements of new Rule 18f‑4 and the first to deal with “unfunded commitment agreements.” Before plunging into the substance of paragraph (e) of Rule 18f-4, which regulates unfunded commitment agreements, I want to revisit a problem I have with the definition. My problem stems from trying to answer a basic question: Is a binding commitment to make a loan upon demand by the borrower, with stated principal and term and a fixed interest rate, an “unfunded commitment agreement?” Read the full post at The Asset Management ADVocate.

Every Friday afternoon the U.S. Commodity Futures Trading Commission (the “CFTC”) publishes its Commitments of Traders Report (“COT Reports”).

As explained at the CFTC’s website, these reports “provide a breakdown of each Tuesday’s open interest for futures and options on futures markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.”  The data in respect of these Friday afternoon reports is provided to the CFTC by regulated market participants (futures commission merchants, clearing members, and foreign brokers and exchanges) on Wednesday morning of each week, with adjustments to the publication and reporting schedules to account for holidays. Continue Reading Bitcoin Futures Contracts: A Look at CFTC Reports About the Types and Volume of Trading on U.S. Futures Exchanges

On February 10, 2021, the Office of the Comptroller of the Currency (the “OCC”) published OCC Bulletin 2021-7, Libor Transition: Self-Assessment Tool for Banks, in order to help OCC-regulated financial institutions to identify and mitigate risks related to preparedness for the expected cessation of the London InterBank Offered Rate (“LIBOR”).

A checklist styled Self-Assessment Tool accompanies the Bulletin and consists of 37 questions across four general subject areas that each have one or more overarching questions as an objective.    Continue Reading OCC Publishes LIBOR Self-Assessment Tool for Banks

By Stephen A. Keen & Andrew P. Cross

This is the sixth installment of our discussion of the compliance requirements of new Rule 18f‑4 and wraps up our discussion of paragraph (d) of the new rule and its application to business development companies (“BDCs”), closed-end funds and open-end funds other than money market funds (collectively, “Funds”). This posts identifies which Funds need to update their asset coverage procedures for compliance with Section 18 of the Investment Company Act of 1940 and what those updates should entail.

Continue reading the full post at the Asset Management ADVocate.

This is the fifth installment of our discussion of the compliance requirements of new Rule 18f‑4 and completes our consideration of paragraph (d) of the new rule and its application to business development companies, closed-end funds and open-end funds other than money market funds (“Funds”). Our two previous posts considered the application of that paragraph to reverse repurchase agreements (“reverse repos”) and “similar financing transactions.” This posts identifies transactions that the adopting release (the “Release”) indicates would not be similar to reverse repos. These transactions fall into two categories: (a) derivatives instruments that will be subject to the conditions of paragraph (c) of Rule 18f‑4 and (b) transactions not at all subject to Rule 18f‑4. Continue reading the full post at the Asset Management ADVocate.

Good day.  Good to almost be done with paragraph (d) – only the (hopefully helpful) compliance checklist remains.  DR2

This is the fourth installment of our discussion of the compliance requirements of new Rule 18f‑4. Our last post considered the application of paragraph (d) of the new rule to reverse repurchase agreements (“reverse repos”) and the compliance alternatives provided to business development companies, closed-end funds and open-end funds other than money market funds (collectively, “Funds”). Paragraph (d) also applies to financing transactions that are similar to reverse repos. This post discusses examples of “similar financing transactions” provided in the adopting release (the “Release”).

Continue reading the full post at the Asset Management Advocate.

Good day.  Good to spend even more time with 18f-4.  DR2

By Stephen A. Keen and Andrew P. Cross

This post is the third installment of our discussion of the compliance requirements of new Rule 18f‑4. From this point forward, we will be dealing with exemptions that apply only to business development companies (“BDCs”), closed-end funds and open-end funds other than money market funds (collectively, “Funds”). We first consider paragraph (d) of Rule 18f‑4, relating to reverse repurchase agreements (“reverse repos”).

Continue reading full post at The Asset Management ADVocate.

Short Answer

Yes, for all intents and purposes.

Explanation

The administrative process related to the deferral of Rule 4210 has become a perennial source of confusion, given the perennial deferral of margining on to-be-announced securities (or what can be described as the delayed delivery of margin on TBAs (pun intended), not that anybody is complaining about these deferrals).

So, we have distilled this administrative process down to a few bullet points:

Continue Reading FINRA Rule 4210 Update: Is the deferral of TBA Margining to October 26, 2021 effective already?