SEC Lays Out Upcoming Rulemaking Agenda
Commentary by Steven Lofchie
In its Spring Unified Agenda of Regulatory and Deregulatory Actions, the SEC outlined short-and-long-term regulatory actions that administrative agencies plan to take.
The agenda is organized under two sections: (i) Proposed Rule Stage and (ii) Final Rule Stage. There are 15 rules at the proposal stage, including among them, rulemaking on corporate board diversity, human capital management disclosure, incentive-based compensation, fund fee disclosure and exchange traded products. There are 19 in the final rule stage, including among them, enhanced disclosures by advisers on ESG practices, cybersecurity risk management, adviser outsourcing, best execution and security-based swap position reporting, to name a few. See complete agenda here.
SEC Chair Gary Gensler remarked: "In every generation since the SEC's founding 90 years ago, our Commission has updated rules to meet the markets and technologies of the times. We work to promote the efficiency, integrity, and resiliency of the markets. We do so to ensure the markets work for investors and issuers alike, not the other way around. We benefit in all of our work from robust public input regarding proposed rule changes."
Commentary
Notwithstanding Chair Gensler's remarks as to valuing public input, Chair Gensler's term at the SEC has been marked by comment periods that are the minimum the law allows, even for very significant rulemaking. When the SEC has made significant changes to a proposed rule, it has generally not reproposed the rule for an additional round of public comment.
Leaving aside the de minimis time that the SEC has granted for review of proposed rule changes, an even more serious problem is the overall pace of material rule changes. The agenda shows a multitude of rules that could be the subject of rule adoption in the near future–these potential changes simply do not reasonably account for the ability of regulated firms to keep up with, and absorb the costs of, additional regulation. The injury to smaller firms is proportionately greater, notwithstanding the SEC's claimed sympathy for such firms.