SIFMA Advocates for Connectivity Services in Letter to FSA

In October 2006, the Financial Services Authority issued a consultation paper (06/18) stating that "connectivity and services and associated software...[are] outside the range of goods and services which can be acquired with [dealing] commission." In a letter to the FSA this week, SIFMA disagreed with the FSA proposal citing strong public policies and lack of regulatory consistency. In its letter, SIFMA explained that connectivity services can benefit the ultimate client (the client of the asset manager) by significantly enhancing the quality and efficiency of the order execution process. SIFMA's letter also notes that the FSA proposal is inconsistent with conclusions reached by the U.S. Securities and Exchange Commission. In July 2006, the SEC promulgated interpretive guidance on client commission practices. The SEC guidance stated that "communications services related to the execution, clearing, and settlement of securities transactions and other functions incidental to effecting securities transactions...are eligible under Section 28(e)(3)c."

AMF Fails Management Working Group

As a result of the successful AMF Workshop on Fails Management and Resolution on October 12, 2006, the Forum established a special Working Group for buy side and sell side operations professionals to jointly pursue issues that cause fails that could be improved through an industry-sponsored effort. On Thursday, December 7th, the Working Group held its first meeting and discussed the most common causes of fails and then identified and prioritized several projects that might reduce chronic fails.

Robert Kemp of Morgan Stanley Investment Management is Chair of the AMF Fails Working Group, which consists of over 30 individual members and 10 asset management firms. At the 12/7 meeting, the Working Group agreed to work toward the development of a standard format for reporting fails. Having an industry-standardized fail report would help manage the fails process. The next meeting will be on Wednesday, January 3, 2007. For additional information, please contact Elisa Nuottajarvi of SIFMA at 646.637.9266.

NASD Board Moves toward Consolidation with NYSE

In a press release issued on Wednesday, December 6, 2006, the NASD announced that its Board of Governors overwhelmingly approved by-law amendments that would implement governance changes to enable the recently announced consolidation of the member regulation units of NASD and NYSE Regulation into a new, independent self-regulatory organization (SRO). The by-law amendments will be voted on by the full membership of NASD before taking effect.

The plan to form the new SRO was announced November 28th at the Securities and Exchange Commission. The new SRO would be responsible for all member examination, enforcement, arbitration and mediation functions, as well as all other current NASD responsibilities. SIFMA endorsed the November 28th announcement that the New York Stock Exchange and NASD would consolidate their broker-dealer regulatory arms into a new, single regulator.

Click here to read NASD December 6 Press Release

Click here to read SEC Chairman Cox's Statement on NASD/NYSE Consolidation

Click here to read SIFMA Press Release on NASD/NYSE Consolidation

Moody's Proposal on Rating Preferred Stock and Hybrid Securities

Moody's Investors Service is proposing a two-step process for rating preferred stock and hybrid securities. This proposal suggests guidelines by which these securities would be rated in light of their unique features. Moody's has requested comments on this proposal be received on or before December 31, 2006. SIFMA is currently reviewing the proposal. If you have any questions, please contact Joseph Sack or Mary Kuan of SIFMA at 646.637.9200.

Click here to read Moody's Proposal on Rating Preferred Stock and Hybrid Securities