Our free FinTech news roundup also covers updates for the iComplyKYC platform, the CFTC’s SOFR endorsement for FCMs, and PSCM’s embrace of Northern Trust.
SEC & CFTC Await New Chairpersons
Jay Clayton
The Trump administration has named an acting chairman for the SEC — Elad L. Roisman, an SEC commissioner — as the now-former Chairman Walter Joseph “Jay” Clayton III stepped down at the end of December, six months before his slated exit in June 2021.
Clayton, a Trump team appointee, served for more than three and a half years. President-Elect Joe Biden will appoint Clayton’s successor at the start of the new administration.
“During the time I am in this role, I am fully committed to maintaining the steady course that Chairman Clayton charted during his admirable tenure,” Roisman says.
Roisman, who was sworn in as a commissioner on Sept. 11, 2018, previously served as chief counsel for the U.S. Senate Committee on Banking, Housing, and Urban Affairs, officials say. He also served as a counsel to SEC Commissioner Dan Gallagher; chief counsel at NYSE Euronext; and as an associate at the law firm of Milbank, Tweed, Hadley & McCloy LLP in New York City.
At the CFTC, no replacement has been named for Heath P. Tarbert, who announced last month his plans to resign in early 2021 after serving as the 14th chairman and chief executive, and as a commissioner for the regulator.
Heath Tarbert
During his 17-month tenure, the CFTC “held 20 open meetings, more than the previous seven years combined,” Tarbert says in a prepared statement. The regulator also concluded negotiations with the E.U. and U.K. “to build stronger relationships with our regulatory counterparts overseas.”
In addition, the CFTC “promoted responsible fintech innovation and declared Ether a commodity; we have seen more than 1,000 new products self-certified to trade on our markets,” Tarbert says. “A majority of our work has taken place in the midst of COVID-19 — a global pandemic that is testing the strength of our markets and our ability to adapt.”
KYC Platform Supports Legal Entities & Natural Persons
The updated iComplyKYC platform now supports the onboarding and verification for legal entities and natural persons, according to iComply Investor Services, a software provider and maker of the platform.
“Remote workforces and lockdowns have forced businesses to implement digital solutions for client onboarding, identification, and AML [anti-money laundering] risk management,” according to iComply officials.
In addition, the new requirements governing working from home “have complicated the day-to-day compliance operations of most of the market, and ‘digital first’ is no longer a nice-to-have, but a necessity,” says Matthew Unger, CEO of iComply, in a prepared statement.
The compliance platform can be used to help financial services firms conform to the privacy requirements of the General Data Protection Regulation (GDPR), Personal Information Protection Act (PIPA), Protection of Personal Information Act (PPIA), and the California Consumer Privacy Act (CCPA), officials say.
The iComplyKYC system integrates “edge computing and artificial intelligence into the KYC portal” as a way to cut the total cost of compliance, and to improve user privacy, cybersecurity and straight through processing, Unger says.
CFTC Endorses SOFR-Linked Instruments for FCMs
Futures commission merchants (FCMs) can invest customer funds in financial instruments that “have adjustable rates of interest that correlate closely with, or are determined solely by reference to, a benchmark of the Secured Overnight Financing Rate (SOFR),” according to a temporary no-action relief decision via the CFTC’s market participants division.
A global push is underway to help securities firms move away from the scandal-damaged London Interbank Offered Rate (LIBOR) reference rate-benchmark to its more robust and safer replacement SOFR, which appears to be moving full steam ahead for many financial services firms in the U.S. (Reference rates are essential for corporate and municipal bonds and loans, floating rate mortgages, asset-backed securities, consumer loans, and interest rate swaps and other derivatives.)
“The relief recognizes the increasing use of SOFR as an alternative reference rate to LIBOR [London Interbank Offered Rate] in financial markets and is consistent with previous CFTC staff relief issued to facilitate transition by market participants away from LIBOR,” according to an official CFTC statement.
“CFTC Regulation 1.25 provides that the adjustable rate of interest on permitted investments must be benchmarked to the Federal Funds target or effective rate, the prime rate, the three-month Treasury Bill rate, the one-month or three-month LIBOR rate, or the interest rate of any fixed rate instrument that is a permitted investment,” according to the CFTC. “With this no-action relief, permitted investments may have SOFR-based adjustable rates of interest.”
CFTC officials add that the no-action relief will end as of Dec. 31, 2022.
Pershing Square Capital Management Picks Northern Trust
Pershing Square Capital Management (PSCM) has tapped Northern Trust Hedge Fund Services to provide fund administration services for the hedge fund manager’s Guernsey, Cayman and Delaware domiciled funds, officials say.
Northern Trust will have to handle “the complex daily, weekly and monthly requirements for our funds” across geographies and products, says Michael Gonnella, chief financial officer for Pershing Square, in a prepared statement.
Northern Trust offers asset servicing solutions for many sectors including private equity, private debt, real estate, infrastructure and hedge funds, officials say. Its range of services “includes fund administration, depositary, custody, middle office, banking, treasury and sophisticated reporting solutions.”
Based in New York City, PSCM has assets under administration of $9.4 billion as of September 30, 2020.
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