In October 2017, the US Department of the Treasury (Treasury) published a report titled "A Financial System That Creates Economic Opportunities" (Treasury Report).1 Treasury, under the direction of Secretary Steven T. Mnuchin, prepared the Treasury Report in response to Executive Order 13772 (Executive Order).2 The Executive Order established a set of Core Principles consistent with which the financial markets should be regulated.3

The recommendations in the Treasury Report are organized in the following categories:

  • Promoting access to capital for all types of companies, including small and growing businesses, through reduction of regulatory burden and improved access to investment opportunities;
  • Fostering robust secondary markets in equity and debt;
  • Appropriately tailoring regulations on securitized products to encourage lending and risk transfer;
  • Recalibrating derivatives regulation to promote market efficiency and effective risk mitigation;
  • Rationalizing and modernizing the US capital markets regulatory structure and processes; and
  • Advancing US interests by promoting a level playing field internationally.4

This alert summarizes Treasury's recommendations related to the following sections of the Treasury Report: Access to Capital, Equity Market Structure, the Treasury Market, Corporate Bond Liquidity, Securitization, Derivatives, and Regulatory Structure and Process. As described herein, most of Treasury's recommendations can be accomplished through administrative action by the Securities and Exchange Commission (SEC) or other regulators, rather than through congressional action.

Download >> US Department Of The Treasury: A Financial System That Creates Economic Opportunities - Capital Markets

Footnotes

 1 US DEPARTMENT OF THE TREASURY REPORT, A Financial System That Creates Economic Opportunities: Capital Markets (2017) (hereinafter TREASURY REPORT).

2 Executive Order 13772 was published on February 3, 2017. Treasury delivered four reports related to the Executive Order. The focus of the Treasury Report is capital markets, debt, equity, commodities and derivative markets, central clearing, and other operational functions. TREASURY REPORT, supra note 1, at 5.

3 The Core Principles are as follows: empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth; prevent taxpayer-funded bailouts; foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry; enable American companies to be competitive with foreign firms in domestic and foreign markets; advance American interests in international financial regulatory negotiations and meetings; make regulation efficient, effective and appropriately tailored; and restore public accountability within federal financial regulatory agencies and rationalize the federal financial regulatory framework. TREASURY REPORT, supra note 1, at 3.

4 TREASURY REPORT, supra note 1, at 6. The Treasury Report also made recommendations relating to "[e]nsuring proper risk management for central counterparties (CCPs) and other financial market utilities (FMUs) because of the critical role they play in the financial system."

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