Treasury Issues Comprehensive Report on Capital Markets Reform: Trump Executive Order Required Fundamental Reassessment of Existing Rules; Treasury Submits the Second of Four Reports Examining the Regulatory Framework of U.S. Capital Markets

Sullivan & Cromwell LLP - October 11, 2017

On October 6, 2017, the U.S. Department of the Treasury issued a report recommending comprehensive changes to the current regulatory system for the U.S. capital markets. The report was issued pursuant to President Trump’s Executive Order 13772 issued February 3, 2017, and is intended to “identify laws, treaties, regulations, guidance, reporting and record keeping requirements, and other Government policies that promote or inhibit Federal regulation of the U.S. financial system in a manner consistent with the Core Principles.”

The capital markets report is the second of four reports to be issued by the U.S. Department of the Treasury relating to financial regulatory reform.  The first report, which addresses depository system regulatory reform, covering banks, savings associations, and credit unions, was issued on June 12, 2017.  The capital markets report builds on certain themes identified, and reiterates many of the recommendations made, in the depository system report, reflecting the role of banking organizations in capital markets.  The remaining two reports, which will address (i) asset management and insurance industries, and retail and institutional investment products and vehicles and (ii) nonbank financial institutions, financial technology and financial innovation, are expected to be released in the coming months.  Most of the recommendations in the capital markets report can be accomplished by administrative action by the Securities and Exchange Commission, the Commodity Futures Trading Commission or other regulators, while implementation of a limited number of the recommendations would require congressional action.