US Treasury Report on Reducing Burdens of Capital Markets Regulation
The U.S. Department of the Treasury released a report detailing how to streamline and reform the U.S. regulatory system for the capital markets. The Treasury’s evaluation of current capital market regulations found that significant reforms can be undertaken to promote growth and vibrant financial markets while maintaining strong investor protection. This report is issued in response to the Executive Order 13772 issued by President Trump on February 03, which calls on Treasury to identify laws and regulations that are inconsistent with a set of Core Principles of financial regulation. This is the second report on the administration’s review of the core principles of financial regulation.
In the report, the Treasury identifies numerous ways to reduce the burden on companies that are looking to go public or stay public, while maintaining strong investor protections; these include streamlining disclosure requirements to reduce costs for companies while providing investors the information they need to make investment decisions and tailoring the disclosure and other requirements for companies going public based on their size. Additionally, the Treasury found that the federal financial regulatory framework and processes could be improved by evaluating the regulatory overlaps and opportunities for harmonization of SEC and CFTC regulation and by limiting imposing new regulations through informal guidance, no-action letters, or interpretation, instead of through notice and comment rulemaking. It also found that regulatory processes could be improved by reviewing the roles, responsibilities, and capabilities of self-regulatory organizations (SROs) and making recommendations for improvements.
The Treasury’s review of the derivatives market found the need for greater harmonization between the SEC and CFTC, more appropriate capital and margin treatment for derivatives, and resolution of cross-border frictions that fragment global markets. Additional recommendations in the report include:
- Improving the oversight of financial market utilities (FMUs), such as by FSOC continuing to study the role FMUs play in the financial system and regulators considering appropriate risk management for FMUs to avoid taxpayer-funded bailouts
- Repealing Sections 1502, 1503, 1504, and 953(b) of the Dodd-Frank Act
- Investigating how to reduce costs of securities litigation for issuers with the goal of protecting all investors’ rights and interests
- Increasing the amount that can be raised in a crowdfunding offering from USD 1 million to USD 5 million
- Examining the impact of Basel III capital standards on secondary market activity in securitized products
- Advancing U.S. interests and promoting a level playing field in the international financial regulatory structure
Related Links (PDFs)
Keywords: Americas, US, Securities, Capital Markets, Proportionality, Dodd Frank Act, FMU, US Treasury
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.