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Factbox-Details of U.S. SEC’s rules on corporate trades, money market funds, swaps -Breaking

by Mike Robinson

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© Reuters. FILEPHOTO: This sign can be seen in Washington, D.C., U.S.A, at headquarters of U.S. Securities and Exchange Commission. It was taken on May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly/File photo

By Michelle Price and Katanga Johnson

WASHINGTON (Reuters] – On Wednesday, the U.S. Securities and Exchange Commission(SEC) proposed new rules to affect publicly traded companies and top executives as well as their banks groups and asset managers. Below is a brief summary.

CORPORATE TRADING PLANS

According to the agency, they proposed tightening corporate trading rules for “10b5-1”, which allow insiders to purchase and sell company stock at a future date. This is in addition not violating any restrictions against trading on non-public material.

SEC recommended that executive disclose plans and modifications. However, this is not currently necessary.

The SEC also demands a 120-day cooling period between when an executive decides to execute a trade and the execution of the plan. Companies trading in their securities will be subjected to a 30 day cooling off period. SEC is attempting to prohibit multiple, overlapping plans. Insiders may be able to pick from favorable plans.

When adopting, amending or revising plans, officers and directors must also certify that they don’t have any non-public material.

SHARE BUYBACK DISCLOSURES

Proposed rules for share buybacks require that an issuer disclose information about the buybacks within the first day after the trade. This is in addition to current requirements which only requires quarterly aggregated monthly data to be disclosed.

SEC requires that companies disclose their objective and rationale in repurchases. They also need to describe the policies and procedures used during insider purchases or sales.

SECURITY BASED SWAPS

The SEC rule, outlined here https://www.sec.gov/news/press-release/2021-259?utm_medium=email&utm_source=govdelivery, would require any person or entity who owns a security-based swap that exceeds a certain threshold to promptly provide a public disclosure with the SEC.

MONEY MARKET FUNDS

SEC suggested changes to money markets funds. These were intended to improve liquidity and discourage redemptions. Funds should increase the amount of liquid assets that they have, as well as scrap fees and suspensions for redemptions. This will help to calm investors and discourage them from withdrawing.

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