More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Although the decision is neither official nor public yet, the European Union is expected to recommend against allowing a Deutsche Boerse takeover of NYSE's Euronext. EU officials are preparing the official recommendation, which may come as soon as next week.
In a Dec. 21 meeting, according to Bloomberg, the European Commission team conducting an examination of the proposed deal said they were likely to recommend prohibition of the deal, according to unidentified sources familiar with the proceedings. The team’s advice is nonbinding.
European regulators are concerned about the possibility of competition in derivatives and clearing being threatened by the arrangement. Both NYSE and Deutsche Boerse have offered concessions, but officials told the companies in a Brussels meeting last week that those concessions did not go far enough. The commission has until Feb. 9 to make a ruling on the case.
U.S. regulators already agreed, on Dec. 22, to permit the deal to proceed, provided the Frankfurt-based Deutsche Boerse sells its 31.5% stake in another U.S. equity market, Direct Edge Holdings. Europe has not been so quick to act on a decision, and previously said that the companies would have to divest an entire derivatives business such as Liffe or Eurex.
Both CEOs have said they are not prepared to consider such an action, and offered other concessions instead–capping fees on derivatives trading and clearing for three years, selling the Liffe single-stock derivatives business and licensing the Eurex trading system to a third party.
If the takeover occurs, it would put more than 90% of the region’s exchange-traded derivatives market and approximately 30% of European stock trading under the control of a single company.
Eurex is the region’s biggest derivatives exchange and Liffe the second largest. In the U.S., trading in interest-rate, agricultural and commodity futures is already dominated by a single company, CME Group Inc., after its merger in 2007 with the Chicago Board of Trade and with the New York Mercantile Exchange in 2008.