The SEC recently released its strategic plan for 2014-2018. The document outlines the agency’s mission, vision, values, and strategic goals. The plan lays out four strategic goals:
- Establish and maintain an effective regulatory environment.
- Foster and enforce compliance with federal securities laws.
- Facilitate access to the information that investors need to make informed investment decisions.
- Enhance the Commission’s performance through effective alignment and management of human, information, and financial capital.
Several of the goals outlined in the document are directly relevant to funds. For example, one of the goals in the document is to “modernize the regulatory treatment and valuation of certain portfolio holdings of registered investment companies.” The item primarily addresses the need for either rules or guidance that address the use of derivatives, although it does also mention the “consideration of updated guidance for registered investment companies regarding valuation of their portfolio securities and other assets.” Another goal is the consideration of further reforms to money market funds. Additionally, the agency will consider whether to adopt rules that would allow certain exchange traded funds to be introduced without obtaining exemptive relief. Finally, the SEC also will “continue to work on proposed amendments to advertising rules that would require target date retirement funds’ market materials to provide investors with enhanced information about those funds.” The document also reiterates the Commission’s goal, in compliance with its Dodd-Frank mandate, to reduce reliance to credit-rating references in SEC rules.
Other goals in the document apply to funds as well as other SEC regulated entities. For example, the agency plans to review proxy infrastructure, including issues related to the mechanics of shareholder voting and shareholder-company communications (which includes the role of proxy advisory firms). Additionally, several market structure initiatives would be relevant to funds, including a review of the impact of algorithmic and other automated trading, a consideration of incentives for investors to display trading interest, and enhancement of post trade transparency of alternative trading systems to address market fragmentation and facilitate best execution.
A number of the SEC’s goals regarding how it adopts, administers, and enforces its rules also may have an effect on funds. For example, the agency hopes to enhance the process for no-action, interpretive, and exemptive regulatory requests, with the goal of responding to these requests in a timely fashion. The Commission also plans to expand its outreach efforts to promote compliance practices, including engaging in more proactive communications with registrants and their personnel, including CCOs, senior executives, and board members. The Commission also plans to continue risk based exams and using its specialty groups in enforcement.