Treasury Report Capital Markets

On Oct. 6, Treasury released deregulatory report on capital markets.

  • Followed Jun. 2017 first deregulatory report response to Trump EO, see #32601.
  • Recent Oct. 3 Treasury summit on cutting red tape, Mnuchin speech see #35357.
  • Fact sheet summarized how proposed changes, related to Trump order priorities.
  • Changes are in ambit of regulator discretion, and do not require new legislation.
  • Report content was backed by CFTC Chairman Giancarlo, and SEC Chair Clayton.
  • US Capital Markets
  • In last 20 years 50% decline in number of publicly traded companies, fewer IPOs.
  • US still biggest in world, $29trn equity market, $14trn US Treasury securities, the
    $8.5trn corporate bond market, and $200trn (of notional) in derivatives markets.
  • Regulation is fragmented, Dodd-Frank impacted markets, time to review aspects.
  • Report identifies ways to lower burden on companies looking to go or stay, public.
  • Expanding Market Access
  • Streamline disclosures, to reduce costs for companies going public, based on size.
  • Revisit portions of JOBS Act, raise Reg CF crowdfunding limit to $5mn from $1mn.
  • Redefine accredited investors, to broaden investing public, widen investor access.
  • Liberalize pre-IPO communication, remove non-material disclosure requirements.
  • Regulatory Structure Changes
  • Evaluating regulatory overlaps and ways to harmonize regulation of SEC and CFTC.
  • Include more robust economic analysis, and public input in the rulemaking process.
  • Limiting new regulation through informal guidance, no-action letter, interpretation.
  • Review roles, responsibilities and capability of SROs, recommended improvements.
  • Assess infrastructure role, e.g. FSOC study appropriate risk management for FMUs.
  • Dodd-Frank Partial Repeal
  • Remove controversial conflict mineral rule, repeal Dodd-Frank S. 1502, 1503, 1504.
  • Repeal S. 953(b) on pay ratio disclosure of executive pay vs, median pay, SEC rule.
  • International Issues
  • Examine Basel III impact on US secondary market activities in securitized products.
  • Advance US interests, and promote a level playing field in international regulations.
  • Derivatives Markets
  • Recommended harmonization between SEC and CFTC, change to margin and capital.
  • FIA commended proposal to deduct initial margin of cleared derivatives for leverage.
  • Calculate capital by adjusted SA-CCR method, that provides offset for initial margin
    rather than the current exposure methodology (CEM), which uses the gross exposure.
  • Study how capital and liquidity rules, impact incentive to centrally clear derivatives.
  • Oct. 26, Insurance and Fund Report
  • On Oct. 26, 2017, Treasury recommended reforms for funds, insurance, see #35766.

Regulators Basel; CFTC; SEC; US Treasury; White House
Entity Types Auditor; B/D; Bank; BHC; FCM; IA; IB; Inv Co
Reference PR, Rpt. 10/6/2017, Reg CF, DFA, S. 1502, 1503, 1504, LVR, SA-CCR
Functions Advertising; Compliance; C-Suite; Financial; Legal; Operations; Registration; Research; Risk; Trading; Treasury
Countries United States of America
Products Clearing; Corporate; Derivatives; Fixed Income; Issuance/IPO; Securities
Regions Am
Rule Type Guidance
Rule Date 10/6/2017
Effective Date 10/6/2017
Rule Id 35425
Linked to N/A
Report Issue 10/15/2017
Report Section US Investment

Last substantive update on 10/09/2017