Market participants who are not enamored by the current state of federal securities regulation may have been heartened by the new administration’s January 30, 2017 “two for one” order. The order contemplated that, for each new rule issued by an executive department or agency, two regulations would need to be identified for elimination.

The order can be found at the following link:

As usual, the devil is in the details. How this principle might apply in the world of securities regulation is a bit unclear. For example, if new broker-dealer regulations were proposed, would it make sense to, for example, eliminate Regulation S and Rule 144A? After all, in some cases, securities regulation is beneficial to issuers and underwriters (and investors) because it removes or softens the restrictions that might otherwise be implied by the Securities Act of 1933.

However, these interesting questions were put to rest very quickly. Subsequent guidance issued on February 2, 2017 clarified that independent agencies, such as the SEC, are not covered by the order. (In addition, the original order does not cover “self-regulatory organizations,” such as FINRA.)

The interim guidance can be found at:

Accordingly, while the market expects that the SEC will continue to consider costs and benefits of its regulatory proposals, the SEC will not be required to remove regulations in connection with any new proposals.