WASHINGTON, DC — In a Financial Times op-ed published today, co-founder, president and CEO Dennis M. Kelleher weighed in on recent U.S. regulators’ efforts, including the SEC’s efforts to protect investors and the failure of the CFTC. I explained the outline of the initiative.The full article is available below and online here:
Where regulators can reform Wall Street in 2023
Dennis Kelleher
This year looks set to be a busy and important year for the development of better protection for US investors and markets. The ongoing crypto carnage is a recent reminder of how important it all is.
In 2022, we find some of the best and worst of US financial regulators grappling with this challenge. The U.S. Securities and Exchange Commission “protects investors and maintains fair, orderly, and efficient markets. It promotes capital formation.” This was despite persistent pressure from companies.
On the other hand, the Commodity Futures Trading Commission Looked expand its jurisdiction, important ally Cryptocurrency exchange FTX and its former chief Sam Bankman-Fried.
The SEC led the 2022 financial regulation. Its regulatory agenda included 57 rulemakings: 10 finalized, 32 proposed, and 15 unproposed. While some have criticized the authorities for their volume and speed of action, their rule-making is consistent with previous committee chairs. What has changed is a greater focus on investor and consumer protection.
For example, the SEC has finalized rules to allow investors to obtain independent voting advice and to force companies to recover incentive-based compensation resulting from improper accounting.
The SEC has also proposed rules to hold special purpose takeover vehicles accountable. Demand accurate disclosure on environmental, social and governance issues. Closer scrutiny of private funding. Addresses many issues related to predatory practices and fragmentation in the stock market.
The SEC has a similarly active enforcement record in 2022, filing 760 lawsuits and recovering a record $6.4 billion, including dozens of crypto-related cases.That’s good, but the SEC needs to do better first severely punish an individualespecially supervisors and executives in all cases.
In contrast, the CFTC has unfortunately done little in 2022. The agency exists to oversee the derivatives and commodities markets, but will spend much of 2022 as a cheerleader for the cryptocurrency industry while seeking to expand its jurisdiction at the expense of the SEC’s mandate to oversee securities. spent. illegal.
During a period of historic turmoil in commodity markets, Bankman-Fried and his team met with the CFTC chairman and other officials 10 times in 14 months. CFTC Dangerously Close to Approval FTX Proposal To fundamentally change Clearing house structures and operations by reducing protections for customers, investors, and financial stability.
As the crypto turmoil continues and criminal trials unfold against FTX management, there is no doubt that all financial regulators will carefully scrutinize crypto-related activity, but the aim is much broader. .
Aside from finalizing pending rules, the SEC could propose a number of reforms in areas such as board diversity disclosure, predatory apps that gamify trading, and private placements. Elsewhere, banking regulators are focusing not only on access to goods and services, but also on climate risks.
The Federal Reserve in particular has outlined an ambitious agenda that includes strengthening. very significant capital requirements A plan of requirements to deal with failed banks. The Fed also released its upcoming climate scenario analysis.
Additionally, the Federal Deposit Insurance Corporation is reviewing a deeply flawed bank merger process. Along with the Federal Reserve and FDIC, the Office of the Comptroller of the Currency has also proposed principles for supervision of banks on climate change.In addition, government agencies are very important update The Community Reinvestment Act requires banks to make loans in historically avoided or underserved communities.
Against that busy background, CFTC stands out. Instead of doubling down on current efforts to expand jurisdiction, reviewing loopholes in rules regarding limits on traders’ holdings of major commodities should be a priority. These gaps allow for excessive speculation in commodity markets. We also need to establish a comprehensive framework for managing automated trading risk.
But overall, there is a lot to talk about, and for the first time in many years, all financial regulators will have a full complement of confirmed presidential candidates (with the exception of the OCC, who have acting directors). They should make the most of their opportunities.
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Better Markets was founded in the wake of the 2008 financial crisis to advance the public good in financial markets, support financial reform on Wall Street, and keep the U.S. financial system working for all Americans. It is a non-profit, nonpartisan, independent organization. Also. Better Markets works with allies, including many of the financial industry, to help build a stronger, safer financial system that protects and promotes American jobs, savings, retirement, and more. and promote growth-promoting policies. For more information, please visit the following URL: www.bettermarkets.org.
