Masterclass | September 22, 2026
Learn more here.

Defined outcome products include a range of products designed to provide investors with some level of certainty (a “predictable” outcome if held for the specified period) usually based on a buffer, while providing equity market exposure.  In recent periods, defined outcome ETFs have experienced particularly notable growth.  While a defined outcome may be offered in any number of formats, attention has centered on the buffered ETF and autocallable ETF markets.  With an over 30% growth rate in the last few years, these products may compete with or be complementary to structured notes.  They rely entirely on a basket of derivatives to provide their promised return.

Join our training session at the SRP Americas 2026 conference. Our lawyers will provide an overview of:

  • The range of products being offered and their structures;
  • How these products achieve the intended returns;
  • Basics of taxation of a registered investment company;
  • The tax structuring issues for investors and how these differ when investing in a registered investment company versus a note;
  • SEC registration and disclosure issues for ETFs versus structured notes;
  • Indices designed for these ETFs; and
  • The role of index providers and hedge providers in these ETFs.

On September 17, 2026, the Securities and Exchange Commission (the “Commission” or the “SEC”) issued an exemptive order to be known as the “Innovation Exemption.” This Innovation Exemption grants temporary, conditional exemptive relief under Section 36(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the onchain trading of tokenized National Market System (“NMS”) stock. It is set to expire on September 17, 2031, five years after publication.

The Innovation Exemption represents the Commission’s latest step in its ongoing effort to facilitate the integration of distributed ledger technology into the U.S. capital markets, granting operative exemptive relief that permits onchain trading of registered equity securities. While the exemption is temporary and subject to significant conditions (outlined below), it appears to signal a meaningful step forward in, as SEC Chairman Paul S. Atkins stated, “bring[ing] America’s capital markets into the digital age.”

The Innovation Exemption grants two forms of relief:

  • The TSV Exemption exempts certain trading venues, termed “Tokenized Securities Venues” or “TSVs,”  from the definition of “exchange” under Section 3(a)(1) of the Exchange Act, allowing TSVs to bring together buyers and sellers of Tokenized NMS stock through permissioned automated market makers and liquidity pools (“AMM Liquidity Pools”). A TSV is defined as an organization, association, or group of persons that brings together buyers and sellers of Tokenized NMS Stock by: (1) providing one or more AMM Liquidity Pools for permissioned participants to interact and agree to terms of a trade and (2) setting standards for persons to access trading on such AMM Liquidity Pools.
  • The Covered Firm Exemption exempts certain liquidity providers (referred to as “Covered Firms”) from the definition of “dealer” under Section 3(a)(5) of the Exchange Act when they supply liquidity in the form of Tokenized NMS stock using proprietary capital in an AMM Liquidity Pool.

Notably, the scope of the Innovation Exemption is limited by what qualifies as a tokenized security eligible for trading on a TSV. For purposes of the Innovation Exemption, “Tokenized NMS Stock” means an NMS stock that is (1) a security tokenized by, or on behalf of, the issuer of the underlying NMS stock, or (2) a security tokenized by a third party that is unaffiliated with the issuer of the underlying NMS stock. It does not include securities where a third party issues a crypto asset representing its own security that provides synthetic exposure to an underlying security, such as a tokenized linked security or a tokenized security-based swap. The exclusion of derivative tokenized securities is noteworthy given the recent proliferation of such tokens on offshore platforms, and suggests the Commission is drawing a clear line between tokenization of actual equity interests and the creation of derivative crypto assets that only reference an underlying security.

The exemptions are subject to a number of conditions designed to protect investors and maintain fair and orderly markets, including:

  • Tokenized NMS stock traded on a TSV is subject to limits on the number of symbols and volume traded;
  • A TSV must verify that the Tokenized NMS stock available for trading on the TSV provides holders the same rights and privileges as does traditional NMS stock of an equivalent class;
  • Before making available for trading Tokenized NMS stock that is tokenized by an unaffiliated third party, the TSV must provide written notice and an opportunity to object to the issuer of the underlying NMS stock; and
  • Smart contracts used by a TSV must be auditable, public, and deployed on a public, permissionless distributed ledger.

In addition to the conditions outlined above, market participants considering operating a TSV or providing liquidity as a Covered Firm should note the following operational requirements that must be satisfied before relying on the exemptions:

  • At least 30 calendar days before operating, a TSV must publish a copy of a notice prominently on its publicly available website that includes certain information, and within one business day of publication of the notice, the TSV must provide the Commission written notice that it intends to operate pursuant to the TSV Exemption.
  • A Covered Firm operating pursuant to the Covered Firm Exemption must provide written notice to the Commission of its role as a Covered Firm, and disclose on any public-facing website, if applicable, certain information.

We are closely monitoring developments related to the Innovation Exemption, including the public comment process, and will be publishing a client alert with our detailed analysis in the coming days.

Link to the Fact Sheet: https://www.sec.gov/files/34-106402-fact-sheet.pdf

Link to the Order: https://www.sec.gov/files/rules/exorders/2026/34-106402.pdf

On September 8, 2026, the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) announced that the SEC is expanding its nonpublic draft registration statement review accommodations to issuers of asset-backed securities (“ABS Issuers”) that file on Forms SF-1 and SF-3. The new accommodations for ABS Issuers:

  • permit the submission of draft initial registration statements (including amendments thereto and comment letter responses) on Form SF-1 or Form SF-3 for nonpublic review for ABS Issuers that are filing such form for the first time or for the first time in a particular asset class, or do not have an effective registration statement (for Form SF-3 only); and
  • permit the submission of draft initial renewal or repeat registration statements (but not amendments thereto) on Form SF-1 or SF-3 for nonpublic review.

BACKGROUND

In 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) established the SEC’s confidential review process allowing emerging growth companies (“EGCs”) to submit draft registration statements for initial public offerings (“IPOs”) for confidential, nonpublic Staff review. The confidential process was intended to allow an EGC to defer the public disclosure of certain material or sensitive information until closer to the IPO’s marketing. If the EGC decided not to proceed with the IPO, this confidential information would not be publicly disclosed. Building on the success of the JOBS Act provisions, in 2017, the Staff extended to all issuers the ability to submit confidentially (i) draft registration statements under the Securities Act of 1933, as amended, (ii) IPOs under Section 12(b) of the Exchange Act of 1934, as amended (the “Exchange Act’), and (iii) most securities offerings made within the first 12 months of an issuer becoming an SEC-reporting company.

In March 2025, the Staff expanded availability of the confidential review process to the initial registration statements of any class of securities registered under the Exchange Act as well as to special purpose acquisition companies in connection with business combination transactions under certain circumstances.

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On September 3, 2026, the US Securities and Exchange Commission (“SEC” or the “Commission”) proposed the rescission of Rule 206(4)-5 under the Investment Advisers Act of 1940 (the “Advisers Act”), widely known as the “pay-to-play” rule. The SEC will solicit comments on the proposal for 60 days following publication in the Federal Register.

Rule 206(4)-5, adopted in 2010, generally makes it unlawful for an investment adviser to receive compensation for providing investment advisory services to a state or local government entity for two years after the adviser or any of its “covered associates” makes a political contribution to an official with direct or indirect authority to select investment advisers for that entity. The rule also reaches advisers to pooled investment vehicles in which a government entity invests, and applies to contributions to candidates for office as well as to sitting officeholders. The rule provides de minimis exceptions and an adviser may apply to the SEC for an order exempting it from the two-year ban, but the SEC contends in the proposal that the de minimis exceptions are too low, and that the exemptive process has proven too costly and time-consuming for market participants.

In the release proposing the rescission, the SEC takes the view that the rule’s burdens may not be justified by its benefits, and that existing antifraud provisions and other regulatory frameworks are sufficient to address pay-to-play practices. The SEC suggests that permitting investment advisers to address their pay-to-play risks in a principles-based manner consistent with other existing obligations under the Advisers Act would be appropriate. In other words, the SEC believes that other existing requirements of the Advisers Act and its associated rules operate to require investment advisers to address pay-to-play practices, but retain the flexibility to design tailored compliance policies and procedures and codes of ethics in accordance with their own business models and risk profiles, taking a more holistic approach.

Continue reading this Legal Update.

The Government Accountability Office (GAO) recently reviewed the securities disclosure regime for publicly traded banks without holding companies, which differs from the one applicable to bank holding companies and other public companies, and issued recommendations to Congress and the Securities and Exchange Commission (SEC).

Under the Securities Exchange Act of 1934, federal banking regulators review securities disclosures by publicly traded banks without holding companies.  This contrasts with securities disclosures by publicly traded bank holding companies and other public companies, which the SEC reviews. Although only a handful of banks without holding companies are publicly traded, two of the banks that failed in 2023 fell within that group.

The GAO found that, while federal banking regulators review the securities disclosures of publicly traded banks, their review processes do not require the type of investor-focused qualitative assessment that the SEC performs for disclosures by other public companies.  In particular, none of the banking regulators requires staff to qualitatively assess the content of annual securities disclosures, such as by evaluating whether required statements are not materially misleading and whether disclosures contain sufficient detail for investors about the banks’ financial condition.  This appears to be because the regulators do not view their statutory missions as prioritizing investor protection, even though they are charged with applying federal securities laws to banks. Based on its findings, the GAO recommended that Congress reconsider whether securities disclosures by publicly traded banks should be subject to review by federal banking regulators rather than the SEC.

In addition, the GAO reviewed the SEC’s process for reviewing bank holding company disclosures about breaches of interest rate and liquidity risk tolerances.  That review was driven by the GAO’s finding that the banks that failed in 2023 had not disclosed certain interest rate and liquidity risk-tolerance breaches or how management addressed them.  The GAO recommended that SEC staff provide informal guidance on how such companies should assess whether breaches of interest rate risk and liquidity risk tolerance levels are material information for investors, particularly during periods of rising interest rates.  The SEC disagreed with the GAO’s recommendation based on its belief that targeted, fact-specific supervision is preferable to categorical guidance that may result in unintended consequences.

The Securities and Exchange Commission’s Division of Corporation Finance ushered in the Labor Day weekend holiday by publishing several new Corporation Finance Interpretations (“CFIs”) relating to Securities Act registration statement fees and incorporation by reference on Form S-1.

CFIGuidance
Securities Act Rules Question 240.18A filer tried to register the offer and sale of securities on a Securities Act registration statement using an offset against fees paid on a Schedule 14C filed for a different transaction.  The fee offset provided by Securities Act Rule 457(b) is not available because the Schedule 14C was filed in connection with a different transaction.  Rule 457(b) and Exchange Act Rule 0-11(a)(2) apply on a transaction-by-transaction basis to ensure that, for any single transaction, the total fee paid is to be calculated based on the overall transaction rather than requiring a fee for each step of the transaction. 
Securities Act Forms Question 113.09A company that filed a registration statement on Form S-1 but was not eligible to incorporate by reference and did not use historical or forward incorporation by reference can rely on incorporation by reference in its next pre- or post-effective amendment if, at that time, it meets all conditions to do so.  Any such amendment must include the information required by Item 12 of Form S-1.
Securities Act Forms Question 113.10A smaller reporting company that complies with Item 12(b) of Form S-1 by indicating that it has elected to forward incorporate must meet all of the requirements to do so in General Instruction VII of Form S-1.
Securities Act Forms Question 113.11A company that elected to forward incorporate information filed after the effective date of the registration statement under Item 12(b) must incorporate by reference the documents required to be incorporated by Items 12(a)(1) and 12(a)(2) of Form S-1.
Securities Act Forms Question 113.12If a registrant elects to forward incorporate into Form S-1, it should note that forward incorporation of subsequent Exchange Act filings does not always provide all of the itemized disclosure required in a prospectus in a Form S-1.  Instead, the registrant must consider whether any item of Form S-1 requires disclosure not included in any Exchange Act filings that were incorporated by reference, and may need to file a post-effective amendment or prospectus supplement to add such information.  Information included in an Exchange Act filing under a different heading than that used by Form S-1 still satisfies the Form S-1 requirements for incorporation by reference.

Find the new CFIs here.

The Securities and Exchange Commission (“SEC”) has taken another step toward expanding retail investor access to private markets.  On August 31, 2026, the SEC submitted its planned rulemaking, Enhancing Retail Exposure to Private Markets, to the White House Office of Information and Regulatory Affairs (“OIRA”) for review.  The rulemaking would address both retail exposure to private markets through registered investment companies and the ability of investment advisers to charge performance fees to a broader group of clients.

As we previously blogged, the SEC’s Investor Advisory Committee (“IAC”) signaled support for expanded retail access to private market assets and recommended that the SEC consider ways to facilitate retail exposure through registered investment vehicles, including by revisiting restrictions applicable to registered funds investing in private funds and other illiquid assets.  The current submission moves those IAC recommendations closer to formal regulatory action.

The Investment Company Act component would have significant implications for registered funds seeking to provide retail investors with private market exposure.  The SEC will need to propose amendments to existing rules that would facilitate such investments through registered funds.  The scope of those changes will need to address restrictions on investments in private funds, liquidity, valuation, affiliated transactions and board oversight.  With respect to the Advisers Act, the SEC will need to propose amendments addressing the current restrictions governing performance-based compensation.  Section 205 of the Advisers Act generally prohibits an investment adviser from entering into an advisory contract providing for compensation based on a share of capital gains or capital appreciation.  The proposed amendments will need to expand the group of clients eligible for performance fee arrangements while maintaining appropriate investor protections.

These changes could be particularly relevant to permanent capital vehicles, including business development companies, closed-end funds and interval funds, that seek to provide retail investors with exposure to private equity, private credit and other illiquid investments.  Greater flexibility under the Investment Company Act would expand the range of private market strategies available through registered funds, while broader performance fee eligibility could affect the economics and structuring of advisory relationships.

The OIRA submission is not itself a proposed rule but represents a significant procedural step with the publication of a proposed rule anticipated in October 2026.  If adopted, the rulemaking could mark a meaningful shift in the regulatory framework governing retail participation in private markets. A link to the OIRA submission can be found here.

Yesterday, on September 1, the Securities and Exchange Commission wrapped up what has been a very busy summer by proposing amendments to the rules and forms governing registered transfer agents.  If adopted, this will be the first significant update to this regulatory framework in over four decades, a change many believe is long overdue.  As the proposing release points out, “[t]ransfer agents are a key component of the national clearance and settlement system, performing critical functions related to the securities lifecycle that help protect investors and support the prompt and accurate processing of securities transaction;” underscoring the potential impact of the proposed changes. 

Many of the rules the Commission has proposed this summer—such as Regulation E-Delivery and Regulation Crypto Assets—reflect that our technology is evolving rapidly, from “tokenization initiatives, to cloud-based systems, to AI-enabled operational tools,” and the rules and regulations relating to capital markets transactions need to keep pace.  The proposed transfer agent rules are no different–as SEC Chairman Paul Atkins put it, “[t]his proposal would streamline and modernize the Commission’s rules to reflect transfer agents’ current processes and operations, including the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares.”  Commissioner Hester Pierce echoed his thoughts, “[w]hen the Commission first adopted the rules governing transfer agents, holding paper share certificates was the norm.  Now few paper certificates exist, and transfer agents and other market participants are looking to a future in which many shares will be tokenized.  Our rules need to reflect the new realities of how shares are held and transferred.”  As you will see below, many of the proposed changes reflect this new technological reality.

Key Proposed Changes

Updated Registration and Reporting Requirements

Transfer agents file a Form TA-1 to register as a transfer agent, a Form TA-2 to provide annual disclosures, and a Form TA-W to withdraw from registration.  The proposal would revise the registration process and reporting obligations for transfer agents, including extending the time from filing to effectiveness of Form TA-1 to give the Commission more time to review the Form.  Transfer agents would also be required to file an amended Form TA-2 within 60 days of discovering that previously reported information was materially inaccurate, incomplete, or misleading.  

The questions and instructions on both Forms TA-1 and TA-2 would be updated “to promote clarity regarding the required information and to improve the quality, consistency, and comparability of the information provided in response.”  The Forms would also be updated in response to blockchain technology.  For example, the Commission proposes to require registered transfer agents to report the number of issues for which distributed ledger technology was used to maintain the master securityholder file during the reporting period, a nod to the fact “that the risks associated with safeguarding physical securities certificates are vastly different than the risks associated with safeguarding book-entry securities or tokenized securities.”  In addition, new question 5(a) on Form TA-2 would require disclosure of the number of service providers, including distributed ledger technology platforms, used by a transfer agent during the reporting period.  Further, proposed new question 6(b) would require registrants to report the number of issues, by tokenization model and security type, serviced by the registrant as of December 31, noting that the risks to investors differ depending on the tokenization model.

Proposed Changes to Existing Rules 

  • Definitions (Rules 17ad-1 & 17ad-9):  Modernize the terminology used in the transfer agent rules to reflect existing technologies, such as blockchains and other distributed ledger-based platforms, and also to capture new, as yet unforeseen technologies. 
  • Turnaround and Processing Standards; Limitations on Expansion (Rules 17ad-2 & 17ad-3):  Require transfer agents to adopt written policies and procedures for timely turnaround and processing, align turnaround requirements with the current settlement cycle and reflect current technology, and raise the limitation-on-expansion threshold.
  • Recordkeeping and Record Retention (Rules 17ad-6 & 17ad-7):  Establish a single retention period for most transfer agent records and modernize the provisions governing recordkeeping, including updated electronic record keeping requirements and encompassing records existing solely on distributed ledgers and blockchain networks.
  • Prompt Posting to Master Securityholder Files (Rule 17ad-10):  Align posting timeframes to the modern settlement cycle and introduce technology-neutral terms.  In a comment request, the Staff pointed out another difference in the risks associated with tokenized securities, querying whether “transfer agents that maintain the master securityholder file exclusively on an immutable blockchain network be exempt from the record deletion and retention requirement set forth in Rule 17ad-10(f), given that records created on such networks cannot be “deleted” in the traditional sense?”
  • Safeguarding of Funds and Securities (Rule 17ad-12):  Reframe as a comprehensive risk management provision.  The release notes throughout that transfer agents provide important custody services.  Currently, Rule 17ad-12 focuses on physical custody and it does not provide clear, definitive standards for safeguarding uncertificated securities.  The changes would require written policies and procedures to protect securities and funds, including with regard to cybersecurity risks linked to the increasing use of uncertificated securities, such as book-entry and tokenized securities; mitigate material operational risks; segregate funds; and maintain a business continuity plan. 
  • Lost Securityholders, Inactive Securityholders, and Unresponsive Payees (Rule 17ad-17):  Introduce a new notification requirement for inactive securityholders and update to permit electronic communications and payments.
  • Rescission of Rule 17ad-4.  Rule 17ad-4, which exempts certain transfer agents and securities from turnaround, processing, and recordkeeping requirements, would be rescinded because technological advances have improved the operational capacity of transfer agents of all types and sizes, making these exemptions no longer necessary. 
  • New Compliance and Restrictive Legend Rules.  Proposed new Rule 17ad-30 would require registered transfer agents to establish, maintain, and enforce written compliance policies and procedures designed to ensure adherence with the federal securities laws.  Proposed new Rule 17ad-31 would create specific requirements around restrictive legends on securities and would also require transfer agents to have a reasonable basis to believe that a transaction does not violate, and is not part of a chain of transactions that would violate, the registration requirements of the Securities Act of 1933, as amended, before facilitating it.  Commissioner Peirce described these new requirements as an effort to “empower transfer agents to do a better job in combatting microcap fraud.”

Requests for Comment

In his statement in response to the proposing release, Commissioner Mark Uyeda stressed the forward-looking nature of the proposed rules, remarking that with these changes, “we can better protect investors, support innovation, and strengthen the foundation of the markets we have today and the markets we expect tomorrow.”  Commenters will have the opportunity to opine on whether the proposed rules can, indeed, accomplish this goal, along with other aspects of the proposed rules.  Notably, many of the requests for comment address the use of blockchain and distributed ledge technology in the context of registered transfer agent duties.

Comments are due 60 days after publication of the proposing release in the Federal Register.  Read the SEC’s proposing release, press release and fact sheet.  Read Commissioner Peirce’s statement here and Commissioner Uyeda’s statement here. 

Webinar | September 3, 2026
3:30 p.m. – 4.00 p.m. CET | 2:30 p.m. – 3.00 p.m. GMT| 9:30 a.m. – 10:00 a.m. EST
Register here.

This webinar will focus on the new prospectus rules introduced by Commission Delegated Regulation (EU) 2026/1061 amending Commission Delegated Regulation (EU) 2019/980, and their practical implications for annual programme updates, future debt issuances and prospectus disclosure in the European capital markets.

With the publication of Delegated Regulation (EU) 2026/1061 in the Official Journal on 13 August 2026, the final elements of the EU Listing Act prospectus reforms are now in place. As issuers prepare for upcoming programme renewals and future debt offerings, market participants will need to assess whether existing prospectus documentation, disclosure practices and approval processes should be updated to reflect the new requirements.

In this webinar, Mayer Brown speakers will provide a practical overview of the key changes to the prospectus disclosure regime and discuss how they may affect the preparation, updating and approval of debt prospectuses.

Join us for a practical discussion of the actions market participants should be considering now to ensure that programme documentation and prospectus disclosure remain fit for purpose under the finalised Listing Act framework.

Hybrid | September 3, 2026
Register here.

Practising Law Institute (PLI) will host the 12th Annual Alternative Finance Summit: Fintech, Blockchain, and Crowdfunding program.

Mayer Brown Partner Anna Pinedo will participate in the “Securities Offering and Private Placement Developments: A Prolific, Controversial Year of Rulemaking” session.

See the event webpage for information on the program and the session.