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SEC Regulatory Flexibility Agenda 2023-2024: Key Takeaways

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The Securities and Exchange Commission (SEC) has outlined proposed rules and regulations for 2023-2024. Here are some key takeaways from the agenda.

Proposed Rules and Regulations

Custody Rule Expansion

Digital Assets and Cryptocurrencies

  • The SEC proposes to expand the scope of the custody rule to include digital assets and cryptocurrencies.

Best Execution

Broker-Dealer Requirements

  • Broker-dealers will be required to establish, maintain, and enforce written policies and procedures for determining the best market for securities and making routing decisions.

Liquidity Risk Management/Swing Pricing/Hard Close

Fund Requirements

  • Funds will need to update their liquidity risk management programs.
  • Implement swing pricing.
  • Adopt a “hard close” policy.

Outsourcing by Investment Advisors

Due Diligence and Monitoring

  • Advisors will be required to conduct due diligence on service providers.
  • Periodically monitor the performance of service providers.

Enhanced ESG Investment Practices Disclosures

Fund Requirements

  • Funds that consider environmental, social, and governance (ESG) factors in their investment process will need to disclose additional information regarding their strategy.

Company Requirements

  • Companies will be required to include climate-related disclosures in their registration statements and periodic reports.

Closed-End Fund Repurchase Disclosure

Listed Fund Requirements

  • Listed closed-end funds will need to disclose more information about repurchased shares.

Cybersecurity Risk Management for Funds

Advisor and Fund Requirements

  • Advisors and funds will be required to implement policies and procedures designed to address cybersecurity risks.

Regulatory Flexibility Agenda Timeline

The SEC is required to publish significant rules they are considering in the next 12 months, as outlined in their Regulatory Flexibility Agenda. However, specific dates aren’t guaranteed, and the SEC retains flexibility to address items sooner or later than indicated.