Division of Swap Dealer and Intermediary Oversight ("DSIO") today issued a time-limited no-action letter that provides swap dealers with relief from certain External Business Conduct Standards rules in the context of foreign exchange intermediated prime brokerage arrangements. The relief provided in the no-action letter is applicable to all swap dealers, subject to the conditions and limitations set forth in the letter. Lofchie Comment: Another no-action letter subject to numerous conditions and requiring yet more documentation. Click here to view the No-Action Letter.

The SEC's Office of Investor Education and Advocacy issued an Investor Bulletin to educate investors about interest rate risk: the fundamental principle of bond investing in which interest rates and bond prices move in opposite directions. The SEC explained when market interest rates rise, the price of fixed-rate bonds fall. The SEC also noted that, due to this relationship, it is particularly important for investors to consider interest rate risk when they purchase bonds in a low-interest-rate environment. See: SEC Investor Bulletin.

SIFMA has asked the U.S. Treasury Department (the "Treasury") to defer withholding under FATCA from its scheduled January 1, 2014 effective date until January 2015, because "there is a growing and widespread realization" that the financial industry will not be ready for FATCA withholding by January 2014, resulting in a "substantial amount of over-withholding" that will likely have "severe adverse consequences" for the financial markets. SIFMA noted that key FATCA forms and instructions, including revised Form W-8s, have not been issued in final form, making it nearly impossible for financial

Committee Chairman, Jeb Hensarling (R-TX), opened with his assessment that the Dodd-Frank Act has enshrined taxpayer-funded bailouts. In his remarks, Representative Hensarling took the view that the designation of a firm as being "systemically important" was equivalent to identifying them as "too big to fail" and thus as likely recipients of a government bailout if they did fail. He also indicated that certain of the government's existing guarantee programs were in significant debt, including the Pension Benefit Guaranty Corporation, which he argued demonstrated the inability of the government

FINRA announced that it sanctioned StateTrust Investments, as well as its head trader and chief compliance officer, for allegedly charging excessive markups and markdowns in fraudulent corporate bond transactions and for distributing a prospectus that deceived investors as to conflicts of interest involving an affiliated mutual fund. See: FINRA News Release. See also: StateTrust Investments, Inc. and Jose Luis Turnes Letter of Acceptance, Waiver, and Consent.