Completing the Securities and Exchange Commission’s rulemaking on best interest standards for broker-dealers and investment advisers is a “key priority” for 2019, SEC Chairman Jay Clayton said in a speech today. The rule — proposed in April — has attracted more than 6,000 comment letters, he added. The SEC’s proposal took a different tack than the Labor Department’s now-overturned fiduciary rule; under the SEC’s proposal, a broker-dealer making a recommendation to a retail investor would have a duty to act in the best interest of that customer at the time the recommendation is made.
Looking ahead to market risks, Clayton flagged the ongoing transition away from the London Interbank Offered Rate as a global benchmark for financial instruments. The SEC is working with other regulators to monitor risks associated with transitioning to the Secured Overnight Financing Rate, the Alternative Reference Rates Committee’s preferred alternative, including differences between Libor and SOFR. “More work needs to be done to develop a SOFR term structure that will facilitate the transition from term-based Libor rates,” Clayton said.
Clayton also said that the SEC will focus in 2019 on reforms to the proxy process, access to capital, incentives for long-term investment, distributed ledger technology and initial coin offerings.