On October 6, the U.S. Treasury Department published a report that focuses on capital market oversight and outlines challenges and recommendations to reduce regulatory burdens. The report, “A Financial System That Creates Economic Opportunities: Capital Markets,” is the second in a series of four the Treasury plans to issue in response to President Trump’s Executive Order 13772, which mandated a review of financial regulations for inconsistencies with promoted “Core Principles.” (See Buckley Sandler Special Alert here.) The report notes that while certain capital market regulatory framework elements function well, there remain significant challenges. Specifically, the report recommends—among other things—reducing fragmentation, overlap, and duplication in the U.S. regulatory structure. This includes focusing on effecting changes to promote efficiency and more clearly defining regulatory mandates that would allow agencies to issue joint rulemaking and foster coordination.
Treasury’s recommendations focus primarily on market regulations but also build upon themes identified in the first report published in June 2017, which primarily focused on solutions for providing relief to banks and credit unions. The second report identifies recommendations, actions, and associated “Core Principles” within the following categories:
- “promoting access to capital for all types of companies, including small and growing businesses, through reduction of regulatory burden and improved market 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 regulations to promote market efficiency and effective risk mitigation”;
- “ensuring proper risk management for [central counterparties] and other financial market utilities because of the critical role they play in the financial system”;
- “rationalizing and modernizing the U.S. capital markets regulatory structure and process”; and
- “advancing U.S. interests by promoting a level playing field internationally.”
A fact sheet accompanying the report further highlights Treasury’s recommendations to streamline regulations.