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.
||Basel; CFTC; SEC; US Treasury; White House
||Auditor; B/D; Bank; FCM; IA; Inv Co; BHC; IB
||PR, Rpt. 10/6/2017, Reg CF, DFA, S. 1502, 1503, 1504, LVR, SA-CCR
||Trading; Research; Advertising; Compliance; C-Suite; Financial; Legal; Operations; Registration; Risk; Treasury
||United States of America
||Corporate; Derivatives; Fixed Income; Issuance/IPO; Securities; Clearing
Last substantive update on 10/09/2017