Although it may seem early, it is already time to start preparing for the 2026 annual report and proxy season.  While many disclosure requirements remain consistent from prior years, there has been a significant shift in the focus of, and discourse relating to, the priorities of the Securities and Exchange Commission.  Practitioners started to see the impact of these developments over the past year, and these developments are likely to have an even more significant impact on disclosure and governance practices during the 2026 season.

This Legal Update provides an overview of key issues companies should consider as they address their annual report and proxy disclosure requirements.  

At the recent 2025 U.S. Treasury Market Conference, Securities and Exchange Commission (“SEC”) Commissioner Mark T. Uyeda provided an update on the implementation of the Treasury Clearing Rules. In his remarks, Commissioner Uyeda said the SEC is focused on resolving regulatory ambiguities and addressing unforeseen issues associated with the implementation of the rules. He noted the concerns raised by market participants regarding the compliance deadlines and operational challenges, which led the SEC to extend the compliance deadlines by one year—to December 31, 2026, for cash transactions and June 30, 2027, for repo transactions. Read our prior post. He also noted that the SEC staff has engaged with industry stakeholders to tackle parts of the rules that were ambiguous. See our prior post. 

Commissioner Uyeda said that despite the significant progress that has been made on implementing the Treasury Clearing Rules, important issues remain, including:

  • Inter-affiliate Exemption:  The current exemption in the rules for inter-affiliate transactions may be too narrow, so the SEC is considering expanding the exemption to cover additional transaction types and to better accommodate internal liquidity and collateral management needs.
  • Extraterritorial Scope:  Non-U.S. firms trading with U.S. counterparties face uncertainty regarding clearing requirements.  The SEC is working to clarify jurisdictional questions to enable these firms to plan for compliance.
  • Operational and Margining Issues:  The industry has raised concerns about double margining for registered funds, cross-margining between securities and futures, the impact of failed trades or clearing agency outages, and the treatment of gross versus net margining for segregated customer accounts.
  • Pending Applications: The SEC is reviewing applications from CME Securities Clearing Inc. and ICE Clear Credit LLC seeking to register as covered clearing agencies, which Commissioner Uyeda said would impact implementation.

In closing, Commissioner Uyeda said that the SEC will continue to prioritize its engagement with market participants, industry working groups, and federal and international regulators. He said that interested parties should monitor developments and pointed them to the dedicated SEC Treasury Clearing implementation webpage, which consolidates relevant actions and guidance and will be updated as issues are addressed.

SEC Chair Paul S. Atkins outlined the SEC’s approach to digital asset regulation through “Project Crypto,” emphasizing the need for common sense in the application of federal securities laws to crypto assets.

Token Taxonomy
The new framework would be characterized by a taxonomy that distinguishes among the following four principal categories:

  • Digital Commodities:  crypto assets will not be securities if they are intrinsically linked to, and derive value from, a programmatic operation on a functional and decentralized crypto system rather than from the expectation of profits from the managerial efforts of others;
  • Digital Collectibles:  crypto assets will not be securities if they are intended to be collected and/or used to represent artwork, music, in-game items, or digital references (e.g., internet memes, characters, trends);
  • Digital Tools:  crypto assets will not be securities if they serve practical functions, such as membership, credentials, or access rights; and
  • Tokenized Securities:  crypto assets will be securities if they represent ownership of traditional financial instruments maintained on a blockchain.

Chair Atkins reaffirmed that the Howey test will remain relevant in determining whether a crypto asset is a “security.”  Importantly, he rejected the view that a crypto asset remains a security indefinitely.  This appears to go back to the view expressed by William Hinman in his 2018 speech, Digital Asset Transactions: When Howey Met Gary (Plastic).

Support for Legislative Action
Chair Atkins expressed strong support for Congressional efforts to enact comprehensive crypto market structure legislation.  Mr. Atkins closed by underscoring that the new framework does not signal a retreat from enforcement against fraud perpetrated via crypto assets; rather, it is a commitment to clear, knowable rules that respect the limits of the SEC’s authority and the economic realities of crypto assets.

FINRA has commenced a targeted review of member firm practices relating to public and private offerings undertaken by small-cap, exchange-listed issuers with business operations in foreign jurisdictions, including China (collectively, “small-cap offerings”).  The review focuses on (i) firms that have participated in multiple small-cap offerings as an underwriter, bookrunner, syndicate member, selling group member, or placement agent and (ii) firms that have engaged in initial and/or secondary market trading related to these offerings, including those using omnibus accounts.  The review covers the period of January 1, 2023 through September 30, 2025 (the “Relevant Period”) and encompasses “initial public offerings raising $25 million or less and priced between $4.00 and $8.00, and follow-on offerings and private placements involving those issuers.”

For a firm that participated in small-cap offerings as either an underwriter, bookrunner, syndicate member, selling group member or placement agent, FINRA is requesting the firm’s written supervisory procedures (“WSPs”) as well as compliance policies, manuals, training materials, compliance bulletins, and any other written guidance (collectively, “compliance materials”) relevant to such offerings, including with respect to (i) due diligence and the review and approval of the firm’s participation in such offerings, (ii) Regulation M, and (iii) FINRA Rule 5210 (Publication of Transactions and Quotations).  FINRA also requires detailed information (e.g., issuer name, type of offering, role in the offering, dates on which firm commenced and concluded its due diligence review) for each small-cap offering in which the firm participated.  Finally, for each offering, the firm must provide any engagement agreements, advisory agreements, or other contracts to which the firm was a party.

For a firm that was involved in initial allocation or secondary market trading related to small-cap offerings, FINRA is requesting the following documentation: a copy of the firm’s written anti-money laundering (“AML”) compliance program; WSPs and compliance materials relevant to securities trading (e.g., market manipulation); and WSPs and compliance materials specific to the supervision of omnibus accounts.  Furthermore, the firm must provide a list of all surveillance tools (e.g., exception reports, alerts, monitoring systems) used to supervise trading as well as to detect and cause the reporting of suspicious activity in connection with account openings, the deposit/delivery-in of shares, trading, money movements, unauthorized access to customer accounts and ongoing customer due diligence.

Please see the Targeted Exam Letter for further details.

FINRA’s President and Chief Executive Officer, Robert Cook, recently published a blog post describing FINRA’s ongoing efforts to integrate artificial intelligence (“AI”), including generative AI (“GenAI”), into its regulatory program and engage with member firms regarding their use of GenAI.  Below we highlight how FINRA is using GenAI to perform its self-regulatory functions more effectively and efficiently.

FINRA’s Adoption of AI Tools

FINRA has been developing and using AI to support its market oversight functions for years.  For example, FINRA employs algorithms that use AI to review hundreds of billions of market events generated each day to identify potential fraud, manipulation, or other misconduct, which staff may investigate further or, for matters outside of FINRA’s jurisdiction, refer to the U.S. Securities and Exchange Commission.

According to Mr. Cook, FINRA approaches new AI-enabled tools carefully to ensure each meets its intended purpose and that potential risks are identified and addressed.  In this regard, FINRA’s overall process is coordinated by an internal AI Governance Committee.  FINRA maintains oversight of AI-enabled tools through security assessments and regular reviews to ensure the tools continue to meet FINRA’s security standards and safeguard regulatory information.  In addition, FINRA has made foundational GenAI training available to all staff, together with more specialized training of different tools and how to use them.

Deployment of GenAI-Enabled Tools

Last year, FINRA introduced an internal large language model (“LLM”)-based chat tool, called “FILLIP.”  Staff use FILLIP for support with various regulatory functions, including information summarization, document comparison, and drafting, as well as assisting with member firm risk reviews and analyzing data on mutual funds and exchange-traded funds to facilitate sales practice examinations.  Other GenAI-enabled tools developed by FINRA include:

  • A tool to summarize and analyze investor complaints filed directly with FINRA (which, according to Mr. Cook, in recent years have exceeded more than 10,000 per year), which enables faster review and response by investigators;
  • A tool to summarize and analyze comments on FINRA Regulatory Notices to aid in more quickly understanding and considering feedback on rule proposals;
  • A tool to summarize and evaluate disclosures filed with FINRA’s Credentialing, Registration, Education and Disclosure (CRED) department; and
  • A tool to extract and compare information from firms’ eFOCUS reports.

Collectively, FINRA expects these initiatives to yield considerable annual efficiency gains, allowing FINRA to better serve the interests of investors and member firms.

On October 29, 2025, Paul Atkins, Chairman of the Securities and Exchange Commission (“SEC”), signaled that he will ask SEC staff to evaluate relief for certain firms who engage in a de minimis level of security-based swap (“SBS”) dealing. While the relief will not be issued as long as the government shutdown persists, his statement should be a welcome relief to those preparing for a November 8, 2025 deadline to reduce their SBS dealing activity.

Background

Under Section 15F of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Act, a firm must register with the SEC as an SBS dealer if it engages in activity that constitutes “dealing” in SBS and that dealing activity is more than a de minimis amount. SEC Rule 3a71-2 creates a multipart framework for assessing the de minimis amount, in which (i) credit default swaps (“CDS”) that are SBS are subject to an $8 billion threshold over the prior 12 months for a phase-in period, which may drop to $3 billion over the prior 12 months after the phase-in period, (ii) non-CDS SBS are subject to a $400 million threshold over the prior 12 months for the phase-in period, which may drop to $150 million over the prior 12 months after the phase-in period, and (iii) SBS with special entities are subject to a $25 million threshold.

The phase-in period is scheduled to end on November 8, 2026, at which time the de minimis thresholds for CDS SBS dealing and non-CDS SBS dealing will drop to $3 billion and $150 million, respectively, unless the SEC takes action before that date. However, those thresholds are measured on a rolling 12-month basis, meaning that a firm would need to look back to November 8, 2025 to determine if it had breached either threshold and must register as an SBS dealer.

Atkins Statement

Chair Atkins explained that Rule 3a71-2 requires SEC staff to prepare a report using SBS transaction data that will, among other things, analyze the de minimis thresholds. Further, once the SEC reviews that report and related public comments, it may determine to propose rules to revise the de minimis thresholds and the phase-in termination date.

Given the current shutdown of the federal government, SEC staff are unable to prepare the required report. Therefore, the SEC cannot begin the process of assessing whether to propose rules to revise the de minimis thresholds and the phase-in termination date. This delay may disrupt the SBS markets if firms assume the lower thresholds will take effect on November 8, 2026, and therefore, reduce their SBS dealing activity starting November 8, 2025 to ensure that they are below the $3 billion and $150 million thresholds on November 8, 2026.

Chair Atkins stated that once the government shutdown ends, he will direct staff to evaluate whether relief from the phase-in termination date would be necessary or appropriate so that the lookback period for the $3 billion and $150 million thresholds would not apply before the SEC has had time to consider the staff report and associated public comments. While his statement alone has no effect on the November 8, 2026 phase-in date, it strongly suggests that the SEC will extend the phase-in period to account for the duration of the government shutdown and avoid market disruption. Hopefully this will provide sufficient comfort to firms that engage in de minimis amounts of SBS dealing to avoid market disruption later this month.

Stablecoins and tokenization are revolutionizing markets, finance, and money flows. From ongoing implementation of the GENIUS Act to the daily tokenization of new asset classes, continuous innovation is the only constant.

Our Stablecoin & Tokenization Resource Centers closely track the latest commercial, regulatory, and legislative issues that are shaping these trends. More importantly, they help busy professionals cut through the noise and hype in the market and focus on material, actionable developments.

Access the Resource Centers here:

The EU has a comprehensive legal framework, in which many of the rules are regulatory and implementing standards (RTS and ITS, Level 2) that supplement or specify the EU Regulations and Directives (Level 1). In the last legislature, Level 1 legal acts empowered the Commission to adopt around 430 Level 2 measures. A high volume of level 2 acts can lead to compliance costs and regulatory complexity for stakeholders, while demanding significant resources from co legislators to scrutinise them. In consultation with the EU co legislators, the Commission informed the three European Supervisory Authorities ESMA, EBA and EIOPA as well as the Anti Money Laundering Authority (AMLA) that it will not adopt these non essential acts before 1 October 2027. Where empowerments have legal deadlines, the Commission will propose to amend or repeal them during the upcoming revisions of the relevant Level 1 acts.

Continue reading this Legal Update.

On October 17, 2025, the National Futures Association (“NFA”) announced a proposal to repeal requirements that firms that are registered with the Commodity Futures Trading Commission (“CFTC”) must make certain disclosures to customers regarding virtual currency activities.

The repeal of the disclosure requirements will take effect 10 days after the CFTC receives NFA’s proposal, unless the CFTC takes action to substantively review the change.[1]

Background

NFA is the self-regulatory organization for the derivatives industry. ln 2018, NFA adopted disclosure requirements for member firms that were engaging in virtual currency activities.[2] Futures commission merchants and introducing brokers that engaged in spot virtual currency activities were required to inform customers of the limits to NFA’s regulatory authority, including that NFA did not have authority over spot virtual currency transactions engaged in with an NFA member. NFA also required commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) to provide a standardized disclosure regarding the limits of NFA’s jurisdiction.

Additionally, CPOs and CTAs were required to consider the risks arising from their activities in virtual currencies and customize their disclosure documents and other materials to address those risks. NFA provided an extensive list of potential risk areas and disclosure language that CPOs and CTAs were required to consider.

2025 Changes

At its August 2025 meeting, NFA determined that the disclosure requirements for virtual currency activities were outdated and proposed to repeal them. NFA further stated that the repeal of the disclosure requirements will not relieve CPOs and CTAs from the obligation of appropriately disclosing the material risks related to its offerings.

Among other reasons, NFA explained that a 2023 rule change imposed anti-fraud, just and equitable principles of trade, and supervision requirements on NFA members engaging in virtual currency activities.[3] Therefore, NFA now has clear jurisdiction to discipline a member firm or take other appropriate action to protect customers in the event a firm commits fraud or similar misconduct with respect to its virtual currency activities.

Additionally, NFA noted that the risks associated with virtual currencies continue to evolve, and any list provided to member firms would need to be updated to reflect recent developments.

Takeaways

The repeal of the specialized disclosure requirements for virtual currency activities by CFTC registrants demonstrates the thoroughness of the regulatory sector’s embrace of President Donald Trump’s fundamental shift in federal policy on digital assets. It follows in the footsteps of federal agencies such as the Securities and Exchange Commission, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, as well as the CFTC itself.

NFA notes that it intends to seek input from the derivatives market on new disclosure requirements for virtual currency activities by CFTC registrants. We expect that new disclosure requirements, if adopted, will be less prescriptive than the prior requirements.

[1] See 7 U.S.C. § 21(j).

[2] Disclosure Requirements for NFA Members Engaging in Virtual Currency Activities, NFA Interpretive Notice 9073 (May 17, 2018).

[3] See NFA Compliance Rules § 2-51.

Webinar | November 10, 2025
12:00 a.m. – 1:00 p.m. EDT
Register here.

The proxy and annual reporting season may seem a long way off. However, in light of the amount of work and planning that goes into the proxy statement, annual report, and annual meeting of shareholders, this is the ideal time to begin preparations. Companies will have to weigh various considerations this upcoming proxy season, including the objectives of new leadership at the U.S. Securities and Exchange Commission.  Join a team of Mayer Brown panelists for a series of two webinars to discuss the key issues for the upcoming 2026 season.

This first session, on November 10, 2025, will focus on considerations for the preparation of annual reports, including disclosure trends, hot topics, and compliance tips. Themes to be discussed include, among others:

  • Considerations related to risk factor disclosures
  • Artificial intelligence
  • Cybersecurity and climate change disclosure trends
  • Financial reporting issues, including non-GAAP disclosures, critical accounting estimates, and segment reporting
  • Beneficial ownership reporting
  • Filer status determinations
  • Director and Officer questionnaires

Stay tuned for information on our November 19, 2025, session focused on proxy statement disclosure and annual meeting considerations.