Trending Video: SEC Priorities for Asset Management Industry
Donald Trump has been in the White House for more than a year. So what’s changed for the asset management industry and what should we expect during 2018?
For the first time since 2015, the SEC has a full slate of five Commissioners, now that Hester Peirce, a Republican, and Robert Jackson, a Democrat, have been sworn in. This brings more diverse perspectives to the agency. It also will make it easier for Chairman Clayton to meet quorum requirements for open meetings.
The SEC’s agenda published in December 2017 is a dramatic departure from the past. Clayton promised a shorter and more accurate agenda for 2018. There are four items of interest to asset management firms on his short-term list: (1) a new SEC rule regarding standards of conduct for investment professionals; (2) new rules for “plain vanilla” ETFs; (3) harmonization of SEC and CFTC derivatives rules; and (4) amendments to the Volcker Rule. Two significant rules have fallen off the SEC’s agenda: (1) a proposed business continuity and transition planning rule; and (2) potential rules requiring investment advisers to have third-party compliance reviews.
As required by President Trump’s executive orders, the Treasury Department issued reports on Asset Management and FSOC issues in 2017. Treasury’s thoughtful and moderate recommendations have wide support among asset management firms and trade groups and I think they’ll help shape future SEC actions.
Clayton has listed cybersecurity as a top priority as well. It will continue to be one of the most important and resource-intensive issues that asset managers must deal with. This is an area where technology and potential threats are escalating and changing rapidly. It will require substantial, continuing, and cooperative efforts by both government agencies and the private sector.
Clayton has said that a standard of conduct rulemaking for investment professionals is one of his top priorities. Anticipate that the SEC will consider a proposed rule during 2018, but don’t expect smooth sledding. If this was easy, it would have been done many years ago.
Clayton has clearly voiced his steadfast support to continue a strong and active enforcement program. His 2018 budget devotes half of the SEC’s resources toward enforcement with the addition of a new cyber unit and a retail investor task forces.
The SEC is under pressure to allow cryptocurrency offerings. Clayton’s statements thus far have underscored the risks of such offerings. Hyper-intense public interest will ensure that these issues remain in the high-profile category.
So the SEC’s agenda is taking shape, including an enhanced focus on cybersecurity and retail investors, working on fiduciary and ETF rulemakings, and considering issues raised by Treasury Department reports. Asset managers need to continue to observe their legal, regulatory and compliance obligations while paying close attention as developments occur during the coming months.