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Treasury Report Recommendations Line Up with Push Toward Financial Deregulation

The U.S. Treasury’s June report on the capital markets targets a slew of financial regulations and places significant responsibilities on the SEC and CFTC, both of which are still lacking a full complement of commissioners. The chairmen of both agencies stated their support for the report’s recommendations, according to a New York Times report. The Treasury’s recommendations are aligned with several proposed changes in the Financial CHOICE Act, including repealing key Dodd-Frank measures. Bloomberg reports that while some of the changes would require congressional action, most can be accomplished by re-writing existing rules, which would be less cumbersome.Among the regulations targeted for rollback are: regulations governing initial stock offerings, disclosure requirements for public companies, and the exemption of smaller companies from certain regulations. The report advocates increased access to capital and investment opportunities, safeguarding the Treasury market, and proper oversight of clearinghouses and other market utilities. The Treasury report also calls for:

  • Greater harmonization between the SEC and the CFTC and more appropriate capital and margin treatment for derivatives, allowing space for innovation and flexibility in execution processes, and improvements in market infrastructure.
    • The SEC and CFTC to make their rulemaking processes more transparent and incorporate improved economic analysis, an updated consideration of the effects on small entities, and public input as appropriate. The Treasury also recommends that the SEC and the CFTC avoid imposing substantive new requirements by interpretation or other guidance.
    • The CFTC and SEC to conduct comprehensive reviews of the roles, responsibilities, and capabilities of self-regulatory organizations under their respective jurisdictions and make recommendations for operational, structural, and governance improvements of the SRO framework.

Meanwhile, the SEC voted to propose amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies. The proposed amendments and changes would affect filings by public companies as well as registration statements filed by mutual funds.