Securities Regulation Daily SEC, CFTC rules priorities shift as Trump Administration updates regulatory agenda
Friday, July 21, 2017

SEC, CFTC rules priorities shift as Trump Administration updates regulatory agenda

By Mark S. Nelson, J.D.

The Trump Administration announced that it has updated the unified regulatory agenda to reflect changes in the direction of agency rulemaking, including at the SEC and CFTC. The unified agenda, published periodically by the Office of Information and Regulatory Affairs at the Office of Management and Budget within the Executive Office of the President, contains broadly stated goals for agency rulemaking during the next year. According to a brief announcement, the updated unified agenda reflects hundreds of withdrawn agency proposals, the reclassification of hundreds more agency actions, and plans for agencies to begin publishing lists of inactive rules.

Deregulatory goals. White House Principal Deputy Press Secretary Sarah Sanders opened a press gaggle with OMB Director Mick Mulvaney by stating that the revised unified agenda showed the Trump Administration was "…blowing away our initial one in and two out goal for regulatory reform." Mulvaney then introduced an initiative he called "MAGAnomics," which he said included a "regulatory accountability project" tied to the Trump administration’s "deregulatory agenda." MAGAnomics has several other components, but all of them, said Mulvaney, are intended to drive a "sustained" U.S. growth rate of three percent.

Mulvaney also said that while the Trump Administration’s deregulatory goal is "two-for-one," he asserted that the administration had actually achieved a "16 to 1" rate for "major actions," although he said in reply to a follow-up question that 12 of the 16 changes were achieved via use of the Congressional Review Act. While Mulvaney did not specifically mention SEC rules in this context, the first of the CRA actions signed by President Trump involved Congressional disapproval of the SEC’s resource extraction issuers rule (H.J. Res. 41).

SEC and CFTC plans. The updated unified agendas for the SEC and CFTC are strikingly different: the SEC’s agenda mentions few Dodd-Frank Act items, while the CFTC’s agenda contains many items regarding Dodd-Frank Act swaps and derivatives provisions. Both agendas warrant a closer look.

The SEC’s new agenda appears to be focused on disclosure, filing requirements, and implementation of the Fixing America’s Surface Transportation (FAST) Act. Prior SEC rulemaking agendas included proposals on the universal proxy, boardroom diversity, a standard of conduct for personalized investment advice, hedging by employees and executives, and pay for performance disclosures. But these priorities have been dropped from the updated agenda. Still, notable holdovers from earlier agendas include: exchange traded funds, reporting of proxy votes, algorithmic trading, Commission rules of practice, and disclosures by mining companies.

In his first major speech since becoming SEC chairman, Jay Clayton said that Main Street investors were the touchstone for the agency’s success in meeting its tripartite mission. The speech outlined eight principles for SEC regulation that are broadly consistent with stated Trump Administration regulatory goals.

Meanwhile, Acting CFTC Chairman (then-Commissioner) J. Christopher Giancarlo in January outlined an agenda focused on swaps and derivatives and financial technology. Giancarlo reiterated his views in testimony to a subcommittee of the Senate Appropriations Committee in June, noting that the Dodd-Frank Act rulemaking era was nearing an end: "It also means that the CFTC will embrace the Administration’s directive that each federal agency minimize the costs incurred by regulation. We plan to accomplish this through the KISS [Keep It Simple, Stupid] initiative I launched in March, which includes both internal and external reviews of rules and processes."

The CFTC’s updated unified agenda reflects many of Giancarlo’s goals. In addition to the many swaps and derivatives items, the updated agenda held over a rulemaking on whistleblower incentives and protections. But the agenda dropped mentions of several recordkeeping rules, aggregation of positions, and COO reporting requirements.

Both the SEC under Clayton (and former Acting Chairman Michael Piwowar) and the CFTC under Giancarlo have asked for public comments on a range of agency rules that could be eyed for future tweaks or roll-backs. The SEC has most prominently sought to ease conflict minerals reporting requirements. The SEC also has expanded a Jumpstart Our Business Startups (JOBS) Act provision allowing for the confidential submission of draft registration statements for staff review (originally just for emerging growth companies) to a much wider set of companies.

The CFTC has pursued a more generalized approach under Giancarlo’s KISS initiative by seeking public comment on simplifying and modernizing all of the agency’s rules. The statement, however, noted that Giancarlo explained that the initiative was about reducing burdens, not repealling or re-writing rules. Giancarlo’s KISS initiative includes plans to adapt CFTC rules to promote economic growth, bolster U.S. financial markets, and "right-size" the CFTC’s rulebook.

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