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Regulation and Compliance > Legislation

House Spending Bill Kills SEC Custody Rule, Curbs CAT Data Collection

By Melanie Waddell

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House Appropriations Committee legislation up for debate in Congress would prohibit the Securities and Exchange Commission from finalizing and/or enforcing a host of rules — including the agency’s new custody rule and Regulation Best Execution.

H.R. 4664, the Financial Services and General Government Appropriations Act, 2024, states that none of the funds made available by the act may be used to finalize, implement or enforce Regulation Best Execution or the agency’s new custody rule, known officially as ‘‘Safeguarding Advisory Client Assets.”

As it relates to the agency’s Consolidated Audit Trail, the legislation also prohibits the securities regulator as well as the Financial Industry Regulatory Authority from collecting, or implementing any program that would collect, retail investors’ personally identifiable information (PII).

Industry groups have argued that the CAT system, which tracks orders and trades and was conceived after the 2010 “flash crash,” is a violation of investor privacy and an overreach of the SEC’s authority and are challenging it in court.

The bill would also stop the SEC from using funds to finalize, implement or enforce the pro-posed climate disclosure rule, called ‘‘The Enhancement and Standardization of Climate-Related Disclosures for Investors,” and its rulemaking entitled ‘‘Open-End Fund Liquidity Risk Management Programs and Swing Pricing; Form N- 23 PORT Reporting.’’

The Biden administration said in a statement that if presented with H.R. 4664, President Joe Biden would veto it.

The administration strongly opposes reductions to SEC funding from the fiscal 2023 enacted level.

The administration said that it also “strongly opposes sections 550 through 556 of the bill, which would limit the SEC’s ability to enforce existing rules. These include prohibiting implementing rules related to data collection, climate relate disclosures, and various investor protection rules.”

Melanie Waddell

@Think_MelanieW

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