The Securities and Exchange Commission's examination priorities for fiscal year 2024 will include compliance with new rules, operational resiliency, and emerging technologies — including artificial intelligence and cryptocurrency — the SEC's division of examinations said.
"This year, for the first time, we are aligning the publication of our priorities with the start of the fiscal year with the hope that it will better inform investors and registrants of the key risks, trends, and examination topics that we plan to focus on in the upcoming year," the division wrote in a report released Oct. 16.
Those priorities include ensuring compliance with newly adopted rules, such as the rule shortening the securities settlement cycle to one business day after a trade instead of two, which the commission adopted in February.
"In connection with this change, the division will assess registrant preparations associated with this shortening of the settlement cycle, which has a compliance date of May 28, 2024," the report said.
In addition, the division of examinations said it will focus on broker-dealers and advisers' practices to prevent operational disruptions and respond to them accordingly.
"Operational disruption risks remain elevated due to the proliferation of cybersecurity attacks, firms' dispersed operations, intense weather-related events, and geopolitical concerns," the division wrote. "Given these risks and concerns, cybersecurity remains a perennial focus area for all registrants."
The division just published its examination priorities for fiscal year 2023 in February, meaning "several initiatives and focus areas from last year remain as fiscal year 2024 priorities," the report said.
One of those priorities remaining the same is a focus on crypto assets, as the division "will continue to monitor and, when appropriate, conduct examinations of registrants," in the crypto market, according to the report.
A new focus this year is on artificial intelligence, for which the SEC issued a proposal in July. The proposal directs investment advisers and broker-dealers to identify conflicts of interest associated with certain technologies, such as AI, and to neutralize or eliminate the effect of those conflicts.
In comment letters, many industry groups have called for the SEC to withdraw the proposal, as they say it will harm the industry.
