The Securities and Exchange Commission (SEC) announced the withdrawal of 14 proposed rulemakings issued between 2020 and 2023, signaling that it does not intend to finalize these rules. In April, the Committee sent a letter to the SEC requesting the recission, modification, or re-proposal of multiple proposals.
"I commend the SEC's decision to withdraw several misguided Gensler-era proposed rulemakings. For too long, consumers and financial institutions have faced unnecessary burdens imposed by overreaching federal regulators. This announcement is a meaningful step towards restoring balance, protecting investors, and encouraging innovation. I look forward to working alongside Chairman Atkins to usher in a new era at the agency that prioritizes transparency and accountability," said Chairman French Hill (AR-02).
Specifically, the Committee suggested the following proposals that were withdrawn in the SEC's announcement:
Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers: Targeted broker-dealer/adviser use of AI and behavioral nudging.
Safeguarding Advisory Client Assets : Would have overhauled custody rule under the Advisers Act.
Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices: Sought to require advisers and funds to disclose how ESG factors are integrated into investment decisions.
Outsourcing by Investment Advisers : Would have imposed due diligence and disclosure requirements on third-party service providers.
Prohibition Against Fraud, Manipulation, and Deception in Connection With Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers: Required public disclosure of large swap positions.
Regulation Best Execution : Would have created a standalone best execution regime for broker-dealers with specific obligations for retail transactions.
Order Competition Rule : Required brokers to expose retail orders to open auctions before internal execution.
Regulation Systems Compliance and Integrity : Expanded the scope of “SCI entities” and updated compliance requirements for system integrity.
Cybersecurity Risk Management Rule for Broker-Dealers, Clearing Agencies, Major Security-Based Swap Participants, the Municipal Securities Rulemaking Board, National Securities Associations, National Securities Exchanges, Security-Based Swap Data Repositories, Security-Based Swap Dealers, and Transfer Agents : Mandated cybersecurity programs and breach reporting by SROs, broker-dealers, swap dealers, and others.
Supplemental Information and Reopening of Comment Period for Amendments to Exchange Act Rule 3b-16 Regarding the Definition of “Exchange”: Aimed to bring communication protocol systems and additional ATSs under the Exchange Act definition of “exchange.”
