The Securities and Exchange Commission (SEC) formally withdrew the following proposed Gensler era rulemakings:
- Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals Under Exchange Act Rule 14a-8. In July 2022, the SEC published a rule proposal that would have amended the substantive bases to exclude shareholder proposals under the shareholder proposal rule.
- Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers. In August 2023, the SEC published new rules under the Securities Exchange Act (Exchange Act) and the Investment Advisers Act (Advisers Act) that addressed the use of predictive data analytics. The proposed rules proved extremely controversial. Responding to the significant negative comments, then Chair Gensler committed to re-propose the rules in order to address concerns that the rules were overly broad. In recent months, the SEC has hosted a roundtable on artificial intelligence in the financial industry as well as roundtables on closely related topics. SEC representatives have stated that these discussions are intended to help provide a basis for informing future proposed regulations on the use of artificial intelligence.
Advisers Act Related Measures
- Safeguarding Advisory Client Assets. In March 2023, the SEC released a proposed rule under the Advisers Act relating to how advisers safeguard client assets, which addressed, among other things, the custody rule.
- Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies. In March 2022, the SEC published proposed new rules and amendments to existing forms under the Advisers Act and the Investment Company Act that would require registered investment advisers and investment companies to adopt and implement written cybersecurity policies and procedures reasonably designed to address cybersecurity risks and incidents, report information confidentially to the SEC regarding certain cybersecurity incidents and maintain related records.
- Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social and Governance Investment Practices. In June 2022, the SEC proposed amendments under the Advisers Act and the Investment Company Act to require, among other things, registered investment advisers, certain advisers exempt from registration, registered investment companies, and business development companies, to provide additional information regarding their environmental, social, and governance practices.
- Outsourcing by Investment Advisers. In November 2022, the SEC published a proposed rule under the Advisers Act to, among other things, prohibit advisers from outsourcing certain services without first meeting certain requirements.
Market Structure Measures
Under then Chair Gensler, the SEC proposed what amounted to an overhaul of equity market structure, which, the Chair had argued were intended to promote transparency and competition and to modernize the markets. However, opponents of the measures, which were rolled out in fairly rapid succession, contended that these were unnecessary and had been announced without sufficient analysis and consideration of their potential effects and how these various proposals and changes would interrelate with one another.
- Volume-Based Exchange Transaction Pricing for NMS Stocks. In November 2023, the SEC published a proposed new rule under the Exchange Act to prohibit national securities exchanges from offering volume-based transaction pricing in connection with the execution of agency-related orders in NMS stocks. In addition, if exchanges offered such pricing for their members’ proprietary orders, the proposal would have required the exchanges to adopt anti-evasion rules and written policies and procedures related to compliance with the prohibition, as well as disclose certain information.
- Regulation Best Execution. In January 2023, the SEC published proposed new rules under the Exchange Act relating to a broker-dealer’s duty of best execution. Proposed Regulation Best Execution would have changed the existing regulatory framework concerning the duty of best execution by requiring detailed policies and procedures for all broker-dealers and additional policies and procedures for broker-dealers engaging in certain transactions with retail customers, as well as related review and documentation.
- Order Competition Rule. In January 2023, the SEC published a rule proposal to, among other things, amend the regulation governing the national market system under the Exchange Act to add a new rule prohibiting a “restricted competition trading center” from internally executing certain orders of individual investors at a price unless the orders were first exposed to competition at that price in a qualified auction operated by an open “competition trading center,” subject to limited exceptions.
- Regulation Systems Compliance and Integrity. In April 2023, the SEC published proposed amendments to Regulation Systems Compliance and Integrity (“Regulation SCI”) under the Exchange Act. The proposed amendments, among other things, would have expanded the definition of “SCI entity” to include a broader range of key market participants in the U.S. securities market infrastructure and amended certain provisions of Regulation SCI.
- Cybersecurity Risk Management Rule for Broker-Dealers, Clearing Agencies, Major Security-Based Swap Participants, the Municipal Securities Rulemaking Board, National Securities Associations, National Securities Exchanges, Security-Based Swap Data Repositories, Security-Based Swap Dealers, and Transfer Agents. In April 2023, the SEC published a proposed new rule and form and amendments to existing rules to, among other things, require broker-dealers, clearing agencies, major security-based swap participants, the Municipal Securities Rulemaking Board, national securities associations, national securities exchanges, security-based swap data repositories, security-based swap dealers, and transfer agents to address cybersecurity risks through policies and procedures, immediate notification to the SEC of the occurrence of a significant cybersecurity incident and, as applicable, reporting detailed information to the SEC about a significant cybersecurity incident, and public disclosures
- Amendments Regarding the Definition of “Exchange” and Alternative Trading Systems (ATSs) That Trade U.S. Treasury and Agency Securities, National Market System (NMS) Stocks, and Other Securities. In March 2022, the SEC published proposed amendments to rule 3b-16 under the Exchange Act, which defines certain terms used in the statutory definition of “exchange” under section 3(a)(1) of the Exchange Act to include systems that offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities. The SEC, among other things, also published certain proposed or reproposed amendments to the SEC’s regulations relating to ATSs, including regulations for ATSs that trade government securities as defined under section 3(a)(42) of the Exchange Act (“government securities”) or repurchase and reverse repurchase agreements on government securities, as well as certain other rule and form amendments.
- Amendments to the National Market System Plan Governing the Consolidated Audit Trail To Enhance Data Security. In October 2020, the SEC published proposed amendments to the national market system plan governing the consolidated audit trail relating to the security of the consolidated audit trail.
- Position Reporting of Large Security-Based Swap Positions. In February 2022, the SEC published a release proposing new rules 9j-1 and 10B-1 under the Exchange Act, as well as amendments to rule 15Fh-4 (later redesignated rule 15fh-4) under the Exchange Act. The SEC published a release adopting new rule 9j-1 and amendments to rule 15fh-4 in June 2023. In June 2023, the SEC published a release reopening the comment period for new rule 10B-1, which would have required any person with a security-based swap position that exceeds a certain threshold to promptly file with the SEC a schedule disclosing certain information related to its security-based swap position. The SEC now formally withdrew proposed rule 10B-1 concerning position reporting of large security-based swap positions that were the subject of the June 26, 2023 comment period reopening.
It is unclear whether or how the SEC will move forward with regard to any market structure modernization initiatives.
See the withdrawal notice here, https://www.sec.gov/files/rules/final/2025/33-11377.pdf.
[View source.]
