At a hearing titled: "Examining the Agenda of Regulators, SRO's and Standard Setters for Accounting, Auditing and Municipal Securities," members of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises heard testimony on: (i) the Rule 15b9-1 FINRA registration proposal, (ii) the money market fund rule, (iii) bond market transparency and liquidity, (iv) the Treasury trade reporting proposal, (v) the "materiality" standard, and (vi) the Public Company Accounting Oversight Board ("PCAOB").
The Delta Strategy Group provided the following "key takeaways" from the hearing:
- Representative Randy Hultgren (R-IL) expressed concerns about options markets and the proposed SEC amendments to Rule 15b9-1 requiring broker dealers specializing in trading on options exchanges to register with FINRA. FINRA Chief Legal Officer Robert L.D. Colby said that FINRA will respond to industry concerns with ongoing dialogue as the rule gets finalized.
- MSRB Executive Director Lynette Kelly explained that the new municipal bond market rule proposal requiring dealers to disclose markups was pursued after careful economic analysis and industry feedback. She said regulators will provide the industry enough time to implement systems as this effort necessitates significant technological changes to current systems.
- Representative and Subcommittee Chair Scott Garrett (R-NJ) urged the Financial Accounting Standards Board and the PCAOB to continue the historical interpretation of the "materiality" standard in SEC filings as they prepare to revise the standard to be consistent with international standards. He also asked regulators, SROs, and standard-setters to incorporate cost benefit analysis into their decision-making.
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