New Bill Would Rein In SEC Rulemaking

Before issuing a regulation, Wagner’s bill says the SEC must:

• Identify the nature and source of the problem that the proposed regulation is designed to address to assess whether any new regulation is warranted.
• Ensure that the proposed regulation is within the Commission’s jurisdiction and that the Commission has the experience and expertise to regulate the subject matter covered by the new regulation.
• Identify the market participants who will be affected by the new regulation.
• Utilize the SEC chief economist to assess the costs and benefits of the intended regulation and adopt it only upon a reasoned determination that its benefits justify the costs.
• Identify and assess available alternatives that were considered.
• Ensure regulation is accessible, consistent, in plain language and is easy to understand.

The SEC must also consider the effects of the regulation on:

• Investor choice
• Market liquidity
• Small businesses
• Competition in the marketplace
• Investor access
• United States’ economic competitiveness

The bill requires the SEC also to issue for notice and comment a proposal to amend or rescind the regulation, or publish a notice that no action will be taken on the regulation.

The SEC under Chairman Gary Gensler has been criticized for the barrage of SEC proposals that the agency has issued — with short comment periods — since January.

The agency received pushback from industry trade groups last week when it issued for comment its proposed new Regulation Best Execution, along with a broad package of equity market structure changes.

Pictured: Rep. Ann Wagner, R-Mo. Official photo.