The Securities and Exchange Commission (SEC) published an update to its regulatory agenda for the year on December 14, 2017, as part of a broad rulemaking agenda published by the Office of Management and Budget, which lists the rules that agencies and departments intend to propose or finalize within a year.
The SEC’s list contains 26 items in proposed and final rule stages.
Notable regulatory changes on the SEC’s horizon include:
- new rules and amendments to allow certain exchange-traded funds (ETFs) to operate without first obtaining exemptive orders from the SEC;
- the proposal of a personalized investment advice standard of conduct, commonly referred to as a “uniform fiduciary standard;”
- amendments to Rule 2-01(c)(1)(ii)(A) of Regulation S-X regarding the independence of an accountant when the accountant has a lending relationship with an entity that holds equity securities of the accountant’s audit client; and
- new rules and forms as well as amendments to rules and forms to modernize the reporting and disclosure of information by registered investment companies.
Conspicuously absent from the regulatory shortlist are rules prescribing funds’ use of derivatives, and fund managers’ adoption of business continuity plans, both of which are already in the proposed rule phase. The SEC moved to the backburner proposed regulations on the definition of “accredited investor;” regulation of security-based swaps; investment company advertising, target date retirement fund name, and marketing; and stress testing by large asset managers and investment companies.
It appears that, on the whole, the SEC will focus on new regulations that streamline or reduce regulation (e.g., codification of ETF orders) while delaying consideration of rules that could add regulatory burden (e.g., investment company use of derivatives), even though some final rules were ready at the end of 2016. This agenda, however, does not mean that the SEC will delay all new rules indefinitely. Rather, we now have an idea of the SEC’s priorities, which can be helpful for allocating compliance resources.