Broker-dealers and insurers rallied after a U.S. appeals court struck down a sweeping Obama-era rule that aimed to protect millions of Americans from conflicted investment advice.

The S&P 500 Life and Health Insurance Index climbed 1 percent at 11:35 a.m. in New York, surpassing the 0.5 percent gain in the broader S&P 500 Index, after the ruling was issued late Thursday by the U.S. Court of Appeals for the Fifth Circuit in New Orleans. Brokerage LPL Financial Holdings Ltd. rose 1.9 percent and banks with large wealth management units, including Bank of America Corp. and Morgan Stanley, gained.

The rule, imposed by the Labor Department, would have added an extra layer of scrutiny for the industry and increased compliance costs. The Obama administration issued the regulation, called the fiduciary rule, in 2016 to force brokers to put their clients’ interests first when offering retirement advice. Industry groups sued that year to block the regulation.

Less Regulation?
“The regulation deflation theme is in full effect and is one of the reasons we think financial stocks should do well,” Evercore Partners Inc. analysts including Glenn Schorr said Friday in a note to clients.

Donald Trump’s presidential victory in 2016 added to uncertainty about the rule’s future, as the administration delayed implementation of some parts of it. The Securities and Exchange Commission, Wall Street’s top regulator, has been working on its own version of the rule to address the fact that the regulation only impacted brokers providing retirement advice.

An SEC rule would likely be broader, affecting the entire industry. Financial firms have largely been supportive of the SEC’s efforts, partly because they believe whatever it comes up with will be less burdensome than Labor’s standard.

The U.S. Chamber of Commerce praised Thursday’s decision and has said that the SEC should take the lead on creating a “workable” standard.

Many companies have already modified business practices to prepare for the regulation, making it unlikely that the legal decision will spur a significant change in business practices, according to Keefe, Bruyette & Woods analysts including Brian Gardner. The analysts also wrote in a note to clients Thursday that the ruling boosts the chances that the fight is heard by higher courts.

“The ruling puts the Fifth Circuit Court at odds with other federal courts and, in our view, increases the likelihood the cases are heard by the U.S. Supreme Court,” the analysts wrote.

This article was provided by Bloomberg News.