SEC Chair Mary Jo White (i) asked the House Financial Services
Committee to approve a
$2.27 billion budget request for FY 2018, (ii) provided updates
on numerous SEC issues and regulatory initiatives, and (iii)
outlined SEC priorities for the coming year. The new budget request
reflects an increase of a $445 million over the
FY 2017 request.
hearing summary, Delta Strategy
Group highlighted Chair White's priorities for the
remainder of her tenure:
Year-End Goals. Chair White stated that the SEC will
continue current efforts on (i) capital, margin and segregation
Title VII of Dodd‐Frank, (ii) rules concerning the use of
derivatives in the asset management space, and (iii) rules with
regard to the electronic reporting of mutual fund reports.
Treasury Markets. Chair White said that SEC staff is
working on guidance that draws a line between dealers and traders
in order to determine whether high‐frequency traders and
proprietary trading firms participating in treasury markets should
be registered as dealers that are subject to SEC oversight.
Equity Market Structure. Chair White indicated that
any changes to Reg. NMS likely will be left to the next
Cybersecurity. Chair White reported that the SEC's
FinTech working group will make targeted recommendations
(i.e., concerning guidance, concept releases and rule
proposals) to foster innovation while protecting investors. In
addition, the Division of Corporation Finance currently is
reviewing companies that issue digitized securities.
Chair White noted that markets and registrants under SEC
oversight "have grown exponentially." She stated
that the SEC's responsibilities have expanded to encompass
hedge fund and other private fund advisers, security-based swaps,
credit rating agencies, municipal advisors, clearing agencies and
crowdfunding portals. Chair White cited the tripling of managed
assets and trading volumes as additional reasons for the
From 2001 to 2015, assets under management of SEC-registered
advisers more than tripled from approximately $21.5 trillion to
approximately $66.8 trillion, and assets under management of mutual
funds more than doubled from $7 trillion to over $15 trillion.
Trading volume in the equity markets from 2001 through 2015 nearly
tripled to over $70 trillion.
Chair White asserted that the budget request would not affect
the deficit (or the amount of funding available for other agencies)
because it is offset by matching collections of fees on securities
Commentary / Steven Lofchie
The Delta Strategy Group summary of the hearing provides useful
guidance on the SEC's likely activities during the coming days
before the President-Elect assumes office. For example, the summary
indicates that Chair White would press ahead with security-based
swap rules. It is unlikely, however, that Chair White would try to
force through other politically controversial measures, like the
rule proposal concerning disclosures of political contributions
(see our previous story, "
SEC Chair Mary Jo White to Step Down").
At the hearing, Representative Maxine Waters (D-CA)
reportedly said that she was "appalled" to learn
that the bank stocks had risen "on news of" a
"massive, destabilizing lawless agenda" and despite
general uncertainty regarding the President-Elect's agenda.
When events play out in ways that are unexpected, and the market
rises precisely when one had expected it to fall, it is reasonable
to ask what assumptions formed the basis of those expectations, and
whether those assumptions were correct. In other words, if the
world reacts in ways that Representative Waters did not expect,
then she might find it useful to question some of her own
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