SEC Places 37 New Rules in Final Stage as part of its Spring Agenda

SEC Releases

Brief Introduction

The SEC has announced its Spring 2023 Regulatory Agenda.

SEC Chairman, Gary Gensler, explains the regulatory goals as focusing on a three-part mission to protect investors, maintain the efficiency and fairness of markets, and facilitate capital formation.

37 rules are now in the Final Rule Stage.

We have provided a list with a brief summary for each rule in the Final Rule Stage below.

Who Does This Apply to?

• These rules have implications for all members of the securities industry including, but not limited to:
  • Registered Investment Advisers
  • Mutual Funds
  • ETFs
  • Registered Broker Dealers

Rules in the Final Stage

1. Release No. 34-96906 Related to Amending the Privacy Act
   • Goal for the Rule:
     • Revise and update the provisions of the act, allowing for electronic methods for identity verification and responding to requests.
2. Release No. 33-11151 Prohibits Conflicts of Interest in Certain Securitizations
   • Goal for the Rule:
     • To prohibit a securitization participant from engaging in any transaction that involves or results in conflict of interest between the securitization participant and an investor in Asset-Backed Securities (“ABS”).
3. Release Nos. 33-11042; 34-94478 Related to Climate-Related Disclosures to Investors
   • Goal for the Rule
     • To enhance registrant disclosures regarding issuers’ climate-related risks and opportunities by requiring information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.
4. Release No. 33-11038 Related to Cyber Security Risk Disclosure For Public Companies
   •  Goal for the Rule:
     • Cybersecurity incidents would be required to be disclosed within four business days. Periodic disclosures should highlight cybersecurity risks and management strategies to combat the risks, among other requirements.
5. Release No. 33-11048 Related to SPACs, Shell Companies, and Projections Disclosures
   • Goal for the Rule:
     • Enhance investor protections in SPAC initial public offerings and other business combination transactions through increased disclosures, reported transactions, reported conflicts of interest, and reduced use of projections.
6. Release No. 34-95267 Shareholder Proposals under Rule 14a-8
   • Goal for this Rule:
     • Revise three of the substantive bases for exclusion of shareholder proposals to provide greater certainty and transparency to shareholders.
7. Release No. 33-11030 Related to Beneficial Owner Reporting Regulation 13D-G
   • Goal for the Rule:
     • Initial filing requirements for Schedule 13D and 13G shortened from ten days to five days with amendments of 13D being filed within one business day, along with expansion of Reg 13D-G and definitional clarifications.
8. Release No. IA-6240 Related to the Custody of Funds or Investments of Clients
   • Goal for the Rule:
     • To enhance custodial protections of client assets, expand the protections to a broader array of client assets, and update recordkeeping and reporting requirements for advisers.
9. Release No. 33-11067 Amendments to Section 35(d) Involving Company Names
   • Goal for this Rule:
     • Increase investor protection by improving and clarifying the requirement for certain Funds to invest at least 80% of their assets in accordance with the investment focus that the fund’s name suggests.
10. Release No. IA -5950 Amendments to Form PF
    • Goal for this Rule:
      • For large Hedge Fund advisers and advisers to Private Equity Funds, new current reporting of large events, losses, etc. within one business day of occurrence along with lower reporting thresholds.
11. Release No. IC -34441 Amendments to Rule 2a-7 for Money Market Funds
    • Goal for this Rule:
      • Increase minimum liquidity requirements, remove liquidity fees and redemption gates below certain thresholds, require certain funds to implement swing pricing, and enhance reporting requirements.
12. Release No. 33-11068 To Enhance Disclosures Related to ESG
    • Goal for this Rule:
      • To create a consistent, comparable, and decision-useful regulatory framework for ESG advisory services.
13. Release No. 3235-AM98 Open-End Fund Liquidity Risk Management Programs and Swing Pricing; Form N–PORT Reporting
    • Goal for this Rule:
      • To better prepare open-end management investment companies (“open-end funds”) for stressed conditions and mitigate dilution of shareholders’ interests.
14. Release No. IA -5955 Regulating Private Fund Advisors
    • Goal for this Rule:
      • Significantly increase requirements for annual and quarterly disclosures, annual audits, fees disclosures, and prohibitions on a list of activities and practices contrary to public interest and those of other investors.
15.  Release No. 33-11028 Related to Cyber Security Risk Management for Funds and RIAs
    • Goal for the Rule:
      • Advisers and Funds would need adopt and implement proper written policies and procedures to combat cybersecurity risks and properly address cybersecurity in their disclosures, among other requirements.
16.  Release No. IA -6083 Amending Form PF and Other Hedge Fund Reporting Requirements
    • Goal for this Rule:
      • Provide greater insight into Private Funds’ strategies, operations, trends and exposure to systemic risk.
17.  Release Nos. IA-6176 Related to Oversight of Third-Party Vendors
    • Goal for this Rule:
      • To prohibit Registered Investment Advisers (“RIAs”) from outsourcing certain services or functions without first meeting minimum supervisory due diligence requirements.
18.  Release Nos. 34-97141 Related to the Protection of Customer Private Information
    • Goal for this Rule:
      • Require Firms to adopt written policies and procedures for incident response programs to address unauthorized access to or use of customer information, including procedures for providing timely notification to individuals affected by an incident involving sensitive customer information with details about the incident and information designed to help affected individuals respond appropriately.
19.  Release No. 34-95431 Related to Clearing Agency Governance
    • Goal for this Rule:
      • Reducing the likelihood that conflicts of interest may influence the board of directors or equivalent governing body of a registered clearing agency.
20.  Release No. 34-93784 Exchange Act Rule 9j-1, and 15Fh-4(c)
    • Goal for this Rule:
      • Prohibition of fraud and misconduct involving security-based swaps, and coercion of a SBS Entity’s CCO.
21. Release No. 34-94615 Related to Security-Based Swap Execution and Registration
    • Goal for this Rule:
      • To create a regime for the registration and regulation of security-based swap (“SBS”) execution facilities and address other issues relating to SBS execution.
22.  Release No. 34-94499 Removing Credit Ratings from Regulation M
    • Goal for this Rule:
      • To prevent artificial influence over a market for security via references to credit rating.
23.  Release Nos. 33-11176; 34-97182 Related to Electronic Submission of Required Documents and Amendments to FOCUS Report
    • Goal for this Rule:
      • Many filings or submissions that are required to be filed with or submitted to the Commission under the Securities Exchange Act of 1934 and the rules and regulations under the Exchange Act will be required to be submitted electronically.
24.  Release No. 34-94313 Related to Short Sale Disclosure Reform
    • Goal for this Rule:
      • Greater transparency in the market through publication of short sale related data to investors and other market participants.
25.  Release No. 34-94062 Amendments to Exchange Act Rule 3b-16b
    • Goal for this Rule:
      • Expands Regulation ATS and extends Regulation SCI to alternative trading systems that trade government securities.
26.  Release No. 34-96495 The Order Competition Rule
    • Goal for this Rule:
      • To prohibit, with certain exceptions, a restricted competition trading center from internally executing certain orders of individual investors at a price unless the orders are first exposed to competition at that price in a qualified auction operated by an open competition trading center.
27.  Release No. 34-89632 Amendments to the National Market System Plan
    • Goal for this Rule:
      • To enhance the security of the consolidated audit trail.
28.  Release No. 34 -93613 Related to the Lending of Securities
    • Goal for this Rule:
      • Increasing the transparency and efficiency of the securities lending market by requiring any person loaning a security to report the material terms of the lending transactions to a Registered National Securities Associate (“RNSA”).
29.  Release No. 34-95763  Standards for Covered Clearing Agencies for U.S. Treasury Securities
    • Goal for this Rule:
      • Requirements related to the policies and procedures of covered clearing agencies involved with U.S. Treasury securities, including amendments to permit margin required and on deposit with covered clearing agencies for U.S. Treasury securities to be included as a debit in the reserve formulas for accounts of customers and proprietary accounts of Broker-Dealers (“PAB”), subject to certain conditions.
30.  Release No. 34-94524 New Rules 3a5-4 and 3a44-2 Related to Definition of a Dealer
    • Goal for this Rule:
      • To add further definition to the term “dealer” and “Government securities dealer” under Section 3 of the Securities Exchange Act of 1934.
31.  Release No. 34-97142 Related to Cybersecurity Risk Management for Multiple Entities
    • Goal for this Rule:
      • All Market Entities will be required to have written policies and procedures designed to address cybersecurity risk. They also, at least annually, would be required to review and assess the design and effectiveness of their cybersecurity policies and procedures in consideration of changes in cybersecurity risk over the time period covered by the review.
32.  Release No. 34-95388 Related to the Exemptions for Certain Exchange Members
    • Goal for this Rule:
      • Narrowing the exemptions from the requirement that Broker-Dealers register with a national securities association.
33. Release No. 34-96493 Related to the Disclosure of Order Information
    • Goal for this Rule:
      • To update the disclosure required for order executions in national market system stocks.
34. Release No. 34-96494 Related to Amendments to the Regulation NMS
    • Goal for this Rule:
      • To adopt variable minimum pricing increments for the quoting and trading of NMS stocks, reduce the access fee caps, and enhance the transparency of better priced orders.
35.  Release No. 34-96496 Regulation Best Execution
    • Goal for this Rule:
      • To enhance the regulatory framework for the duty of best execution, requiring detailed policies and procedures for Broker-Dealers and more robust policies and procedures for Broker-Dealers engaging in certain conflicted transactions with retail customers.
36.  Release No. 34-97143 Regulation SCI Amendments
    • Goal for this Rule:
      • To expand its application to additional key market entities and update certain of its provisions to take account of the evolution of technology and trading since the rule’s adoption in 2014.
37.  RIN 3235-AN27 To Adopt New Rules under 10B
    • Goal for this Rule:
      • To adopt rules under section 10B of the Exchange Act to require certain disclosures in connection with security-based swap positions.  This entry was previously part of RIN 3235-AK77 but is being split off into its own entry.

Vigilant’s Conclusion

As firms make adjustments to their compliance in response to the potential finalization of these 37 rules, it is vital that compliance programs stay up to date with all SEC announcements.

Vigilant is prepared to help your Firm make sense of this new regulatory climate. Allow us to evaluate how your firm may be affected by the implementation of these rules, and help craft a personalized plan to help your firm stay compliant while achieving your business goals.  

Contact Us Today