Twice each year, the Office of Information and Regulatory Affairs publishes the semi-annual “Unified Agenda of Regulatory and Deregulatory Actions” of the various federal agencies. Here, we focus on the Securities and Exchange Commission's (SEC) Spring 2024 rulemaking agenda.
In a previous Katten post, we summarized some of the key SEC initiatives identified in the Fall 2023 agenda, most of which involved finalizing already-proposed rules.
What's Changed?
Certain rulemakings remain in the final rule stage:
- Cybersecurity risk management;
- Environmental, social and governance (ESG) disclosures;
- Reporting of security-based-swap positions;
- Exchange Act Rule 15c3-3 for broker-dealers (Net Capital Rule)
- Regulation Best Execution;
- Order Competition Rule; and
- Exchange Act Rule 3b-16, Regulation ATS, Regulation SCI.
Three rulemakings go back to the “drawing board” and may be re-proposed:
- Safeguarding advisory client assets (Safeguarding Rule);
- Digital engagement practices for investment advisers and broker-dealers (AI Rules); and
- Open-end fund liquidity risk management programs.
Other rules previously identified have been finalized:
- Definition of a dealer;
- Registration requirements for internet advisers;
- Amendments to Rule 605 (execution quality data) under Regulation NMS;
- Regulation S-P; and
- Form PF amendments.
Final Thoughts.
Although the SEC continues to focus on finalizing its aggressive regulatory agenda, recent events suggest headwinds may be looming. For example, the SEC's decision to move away from immediate adoption of certain rules, including the Safeguarding Rule and AI Rules, and potentially re-propose those rules, suggests that the SEC acknowledges recent concerns about the policy decisions being made, the pace of such rulemakings, and even its authority to adopt such rules in their current form. In addition, other rulemakings that remain at the final rule stage (such as Regulation Best Execution, the Order Competition Rule, and other equity market structure proposals) are controversial and have been subject to significant industry push-back and are not likely to proceed to rulemaking as proposed. Finally, additional recent and upcoming political and judicial events undoubtedly compound these concerns: an election year and potential leadership transition at the SEC; significant impacts resulting from a trio of recently decided US Supreme Court cases that “Torpedo the Administrative State,” and the Fifth Circuit's recent ruling that vacated the Private Fund Adviser rules (calling into question the statutory authority used in other SEC rules, including outsourcing by investment advisers and cybersecurity).
