“Efficient capital markets are at the core of a growing and prosperous economy. The Treasury Department’s report offers a blueprint to unlock the resources needed to spur economic growth and job creation,” said David Hirschmann, Senior Vice President at the U.S. Chamber of Commerce.
Disclosure Rules
The Treasury proposes streamlining disclosure and compliance requirements for companies that are both publicly-listed and which are looking to go public, in bid to reduce a secular downward trend in initial public offerings.
It also proposes scrapping a Dodd-Frank rule requiring public companies to disclose information about the potential conflict minerals in their products, and the ratio between the pay for top executives and the company’s average worker.
To boost small companies' access to capital, the report recommends loosening the rules around crowd-funding, and suggests revising the definition of an 'accredited investor' in order to provide more opportunities for mom and pop investors. The Treasury also waded into the long-running debate over equity market structure, proposing the SEC review share-tick sizes, order types, exchange fee models, and how exchanges themselves operate and are governed.
To reduce regulatory duplication and bring the United States more in line with other markets, the report calls for the SEC and CFTC to work more closely and harmonize their rules, but stopped short of recommending a merger of the two - something policymakers have called for in the past.
"The focus on harmonizing rule sets ... is a vital part of efforts to reduce the compliance burden for derivatives end users,” Scott O’Malia, chief executive of bank group the International Swaps and Derivatives Association and a former CFTC commissioner, said in a statement.
Derivatives dealers also stand to gain from a recommendation to relax rules around swaps trading and the cash they must post against derivatives trades.
While banks, brokers and small companies have cheered the report, many of the requirements are likely to draw criticism from public advocacy groups worried they may reduce investor protections, and open the door for banks to pursue risky trading behavior once again.
"It's almost uniformly deregulatory. It calls for cutting back on post-crisis Dodd-Frank rules," said Marcus Stanley, policy director for Americans for Financial Reform. "It's quite dangerous."