The SEC is “taking a retrospective review” of the agency’s rules proposed over the past four years and considering changes or withdrawals, acting Chair Mark Uyeda said March 17.
At the Investment Company Institute’s Investment Management Conference in San Diego, Uyeda identified several rules and proposals the agency is reviewing.
The SEC’s custody proposal is one because the proposal, issued in 2023, would amend the agency’s existing custody rule, expanding which assets are subject to custodial oversight to include “virtually any asset, including crypto,” Uyeda said.
Many industry stakeholders expressed concern with the proposal, and House Republican committee leaders asked Uyeda to withdraw the proposal, among other things, in a recent letter.
Recognizing the proposal has received significant pushback, Uyeda said, “there may be significant challenges to proceeding with the proposal as originally proposed.”
“As such, I've asked the SEC staff to work closely with the crypto task force to consider appropriate alternatives, including its withdrawal,” Uyeda added.
Separately, the acting chair said he has also directed staff “to develop recommendations on reproposing certain aspects of the recently adopted Form N-PORT reporting requirements.”
In August, the SEC adopted amendments to increase the frequency of Form N-PORT reports, which detail registered investment funds’ portfolio holdings. The changes require funds filing Form N-PORT reports to do so on a monthly basis rather than a quarterly basis and also increase the frequency of making the reports publicly available.
Uyeda voted against the changes, contending at the August meeting that public disclosure “raises the risk of predatory trading” and more frequent disclosure could put investment funds at a disadvantage.
The changes are set to take effect in November, though Uyeda said March 17 that “additional input could help us consider if we struck the right balance, or if there is new information … that could inform a reconsideration” of the adopted amendments.
SEC staff is “also considering recommending that the commission extend the effective date” for the amendments, Uyeda said.
On March 14, the SEC announced it would extend the compliance deadlines by six months for its expanded Names Rule. The rule, originally adopted in 2001, requires funds with certain names, such as those specifying a type of industry, to invest 80% of their assets in the investments the name suggests. The amendments expand the requirement to any fund names that have “particular characteristics,” including those with the terms “growth” or “value,” or those that suggest the fund considers environmental, social and governance investing factors.
Last week, Uyeda said he’s also directed SEC staff to re-evaluate the agency’s proposal expanding the definition of an “exchange” and explore options to remove the inclusion of the cryptocurrency market in the rule proposal.
