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Regulation and Compliance > Federal Regulation > DOL

SIFMA Outlines 2016 Priorities

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With few exceptions, the Securities Industry and Financial Markets Association’s policy priorities for 2016 look a lot like its priorities for the current year, although it has made progress on some.

At a press briefing for reporters in New York, SIFMA CEO and President Ken Bentsen listed the trade association’s “major initiatives,” starting with cybersecurity, which “will continue to be a top priority for the industry across the spectrum from the largest to the smallest firms.” Here are some of the highlights of that briefing.


Just last month SIFMA announced the results of its third biennial cybersecurity test drill in September involving 650 participants from more than 80 financial institutions and government agencies. The test was deemed a success in terms of data sharing between firms and regulators, but the consulting firm that observed the exercise recommended that more be done by individual firms, including the creation of separate cyber incident response teams. Bentsen said SIFMA will continue those exercises.

SIFMA is also calling on Congress to pass the Cybersecurity Information Sharing Act of 2015, which would allow companies to share information about cyber threats with the government while protecting those companies from lawsuits for sharing too much information. The Senate and House have each passed their own version of the bill, which have to be reconciled, and privacy advocates have argued that neither bill contains adequate privacy protections.

Protecting Senior Investors

SIFMA’s Year in Review report (which includes data through the third quarter) notes that “1 in 5 Americans aged 65 or older have been victimized by financial fraud” while only an estimated “1 in 44 cases” is reported. Senior investors also face cognitive issues, said Bentsen.

“We’re dealing with an outdated rule,” said Bentsen at the press conference. He added that SIFMA is working with its member firms, regulators, aging advocates, and the academic and medical community to “develop a new rule set that fits the aging population today.”

Earlier this week SIFMA announced its support for the Financial Industry Regulatory Authority’s proposal to combat the financial abuse of seniors, with some reservations. Among other items, SIFMA wants the reporting of suspected cases of financial fraud to state securities regulators, other organizations and immediate family members to be voluntary, not mandatory, and a longer period than two days for firms to contact all authorized parties on an account.

Shortening the Settlement Cycle to T+2 Days

Bentsen said that SIFMA expects to announce later this month the schedule for the process to  shorten the time between when a financial transaction involving U.S. stocks, corporate bonds and munis takes place and when it settles. The current cycle is the trade date plus three days; the industry will be moving to the trade date plus two days. SIFMA has been working with the SEC, the Federal Reserve, financial exchanges, Investment Company Institute and the Depository Trust and Clearing Corp., which provides clearing services.

Opposing the DOL Fiduciary Rule

SIFMA continues to oppose the Department of Labor’s fiduciary rule for financial advisors and wants the DOL to rework the plan before issuing it again. The first version was issued in 2010; a second version – the current one – was issued in April 2015 and has received thousands of comment letters; and the final rule is expected to be issued sometime in the first half of 2016. “We strongly believe that the department should put the rule out for reproposal,” said Bentsen. He said the plan is “counterproductive” and “counterintuitive” and will negatively impact the ability of Americans to save for retirement. “The volume of comments …. are such that this rule needs further review before going to a final stage…. The industry has said repeatedly that this rule is problematic. [and] is going to result in increased costs to investors and the curtailment of advice,” said Bentsen.

When asked about his expectations for what will happen with the proposal, Bentsen said that he saw “a tremendous amount of concern among members of congress that this rule is flawed and will have a material negative impact on retirement investors…. The fact that you’ve got bipartisan members of Congress talking about legislation to pre-empt the department in the rulemaking … indicates that the department is going to need to listen to what Congress is telling them.”

The House passed a bill to stop the proposal from moving forward, but it wasn’t taken up by the Senate. In late October, 47 House Democrats asked DOL to reopen the comment period on the final proposal for another 15 to 30 days, and late last month, 96 Democrats called for refinements to the rule. Now there’s talk that the House bill could be attached to a House or Senate appropriations bill.

Bloomberg’s BNA reported Thursday that that there are several potential riders that could be attached to the omnibus budget bill that Congress is hoping to pass next week to prevent the DOL from finalizing or enforcing its fiduciary rule, and there’s talk that the Senate could choke the rule by cutting the agency’s budget.  

“Congress has a role to play here,” said Bentsen. So does the SEC. Bentsen said the SEC, rather than the DOL, is the proper agency to promulgate a rule that would address the conflict of interest among financial advisors, so that they work in the best interest of their clients. 

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