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SIFMA Legal Brief & Regulatory Tracker - January 2016

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Presentation Slides

1) SIFMA Legal Brief & Regulatory Tracker January 2016 This brief provides a monthly update on pending and recently submitted SIFMA comment letters, listed by agency. Upcoming Filings Department of Labor Issue Description Regulation SIFMA Committee Due Date Savings Arrangements Proposed regulation under the Employee Retirement Income Security Act of 1974 (ERISA) setting forth a safe harbor describing circumstances in which a payroll deduction savings program, including one with automatic enrollment, would not give rise to an employee pension benefit plan under ERISA. Proposed Rule - Savings Arrangements Established by States for Non Governmental Employees Savings Arrangements 1-19-2016 Working Group Issue Description Regulation SIFMA Committee ATS Trade Reporting Proposed rule that would give Proposed Rule Change to Fixed Income Market FINRA the authority to exempt Adopt New FINRA Rule 6732 Structure Regulation certain transactions by a member Working Group ATS that meet specified criteria from the transaction reporting obligations under FINRA Rule 6730. 1-13-2016 Disclosure Proposal FINRA is proposing to require firms SR-FINRA-2015-057 to deliver an educational Proposed rule change to document to retail customers adopt FINRA Rule 2273 when a registered person changes firms. Compliance and Regulatory Policy Committee and Private Client Group 1-20-2016 FINRA Due Date Hong Kong Monetary Authority Issue Description Regulation SIFMA Committee Due Date Margin and Other Risk Mitigation Standards Request for public comment on Non-centrally Cleared OTC Derivative Transactions – Margin and Other Risk Mitigation Standards Consultation paper - Noncentrally Cleared OTC Derivatives Transactions – Margin and Other Risk Mitigation Standards GFXD 1-29-2016 Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448

2) Recently Submitted Congress Issue Description Regulation Credit Risk Transfer Transactions SIFMA provides comments to N/A congress in strengthening the Federal Housing Finance Agency’s (FHFA) efforts to implement private-sector credit risk transfer transactions (CRT) involving Fannie Mae and Freddie Mac. SIFMA and its member firms strongly support Congress in their effort to restore significant levels of private capital participation in the extension of mortgage credit. Like many stakeholders, our industry seeks a mortgage market that balances access to credit with systemic stability and prudent underwriting. SIFMA Committee Submitted Securitization Group 12-7-2015 SIFMA Committee Submitted Systemic Risk and Prudential Standards Committee 12-18-2015 Federal Reserve, FDIC, and OCC Issue Description Regulation Capital Treatment of Settled to Market Cleared OTC Derivative Contracts SIFMA provided comments to N/A multiple agencies to inform them of a forthcoming change in market practice for cleared derivatives. Specifically, central clearing counterparties (CCPs) have been working with other market participants (including U.S. and European clearing member firms, law firms and accounting firms) to amend or clarify their terms, rules, and procedures to determine circumstances under which the payment of variation margin (VM) for over-the-counter (OTC) derivatives that are cleared through CCPs constitutes settlement of the exposure, as opposed to collateralization. While the status of implementation of these changes varies across CCPs and clearing member firms, SIFMA Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448

3) wanted to make you these agencies aware of the regulatory capital consequences – resulting from the regulatory capital framework’s recognition of settlement as exposure-reducing – about which clearing member firms may notify their supervisors in coming months. Federal Reserve, FDIC, OCC, and SEC Issue Description Incentive-Based SIFMA provides comments to the Compensation Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC) on Re-proposal of Rules on Incentive-Based Compensation Arrangements. Regulation SIFMA Committee Submitted Section 956 of the DoddFrank Act Executive Compensation Committee 12-18-2015 Regulation SIFMA Committee Submitted Senior Investors Working Group 12-1-2015 FINRA Issue Description Senior Investor Protection SIFMA provides comments to the FINRA Regulatory Notice Financial Industry Regulatory 15-37 Authority (FINRA) on Rule 4512 and new Proposed Rule 2165. Senior financial exploitation is a problem that costs senior investors an estimated $2.9 billion annually. Through FINRA’s launch of its tollfree securities helpline for seniors and the release of Regulatory Notice 15-37, FINRA has made clear its commitment to bringing its frontline investor protection expertise to bear on the unique challenges facing aging and vulnerable investors. Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448

4) FINRA and MSRB Issue Description Regulation SIFMA Committee Submitted Bond Market Price Transparency SIFMA provides comments to the Financial Industry Regulatory Authority’s (FINRA’s) Regulatory Notice 15-36 and the Municipal Securities Rulemaking Board’s (MSRB’s) Regulatory Notice 201516. SIFMA strongly supports efforts to enhance bond market price transparency in a way that provides retail investors with useful, clear, and consistent insight into their transactions, and appreciates the deep engagement with our members by both FINRA and the MSRB over the past several months concerning this issue. FINRA Regulatory Notice 15-36 Municipal Securities Division 12-11-2015 Description Regulation SIFMA Committee Submitted Request for Comment on Changes to MSRB Rules to Facilitate Shortening the Securities Settlement Cycle Municipal Securities Division, Operations and Technology Committee 12-10-2015 Regulation SIFMA Committee Submitted Municipal Securities Committee 12-1-2015 MSRB Regulatory Notice 2015-16 MSRB Issue SIFMA provides comments to the Shortened Settlement Cycle Municipal Securities Rulemaking Board (MSRB) on changes to MSRB rules to facilitate shortening the securities settlement cycle. The draft amendments are in response to a financial services industry-led initiative to shorten the regular way settlement for equities, corporate bonds, municipal bonds, and unit investment trusts from T+3 to T+2. SEC Issue Description MSRB Rule G-42 SIFMA provides comments to the Proposed changes to Securities and Exchange MSRB Rule G-42 Commission (SEC) on amendment #2 to its proposed changes to MSRB Rule G-42, on duties of nonsolicitor municipal advisors. Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448

5) U.S. Bankruptcy Court (S.D.N.Y.) Issue Description Case Amicus "Friend of the Court" Brief Whether “flip clauses” – which Lehman Brothers Special subordinate amounts payable to Financing v. Bank of Lehman (in favor of collateralized America NA debt obligation (CDO) noteholders) on the termination of credit default swaps backing synthetic CDOs – are enforceable, or whether such clauses are barred by the ipso facto doctrine of bankruptcy law. SIFMA Committee Submitted Litigation Advisory Committee 12-21-2015 SIFMA Committee Submitted Litigation Advisory Committee 12-18-2015 U.S. Court of Appeals - Eighth Circuit Issue Description Case Amicus "Friend of the Court" Brief Whether a meaningful comparison Tussey v. ABB Inc. may be made between a balanced fund and a target date fund, and what factors and facts can and should be weighed in deciding whether to replace a balanced fund with a target date fund in a company’s 401(k) plan. U.S. Supreme Court Issue Description Case SIFMA Committee Submitted Amicus "Friend of the Court" Brief Whether national bank preemption of state usury laws extends only to an originating national bank, and not to any assignee to whom the bank may sell the debt later in time (specifically, purchasers of credit card loans from national banks), which would likely negatively impact both national banks and secondary market participants who purchase loan products originated by banks. Midland Funding, LLC v. Madden Litigation Advisory Committee 12-11-2015 Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448

6) Wisconsin - Committee on Labor and Government Reform (The Honorable Stephen L. Nass) Issue Description Regulation State Run Retirement SIFMA provides comments to the 2015 Senate Bill 45 Honorable Stephen L. Nass in opposition of SB 45. SB 45 would create a Wisconsin Retirement Security Board (RSB) to conduct a feasibility study on, hold at least four public hearings across the state regarding, and finally establish and manage a private retirement security plan for state residents. We agree that there is a retirement savings challenge in this country; however, we have serious concerns with the legislation focusing on a state run retirement savings plan for private sector workers as its exclusive remedy. SIFMA Committee Submitted State Government Relations 12-10-2015 Washington Stephen Vogt |AVP & Assistant General Counsel, Office of the General Counsel | svogt@sifma.org | 202-962-7393 J.T. Gyorfy |Assistant Vice President, Public Policy & Advocacy | jtgyorfy@sifma.org | 202-962-7448