Capital Markets Americas Quarterly Update

Global Advocacy at CFA Institute covers the major regions of the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific. The worldwide work has two main groupings: of the worldwide work, Capital Markets and Financial Reporting. This report highlights the activities of the Capital Markets Policy Group located in the Washington, DC, and Charlottesville, VA, offices of the America’s division.

We seek to influence financial regulatory policy debates by hosting and participating in policy-focused events, responding to regulatory and legislative proposals, meeting with regulators and legislators and their staff, publishing opinion pieces in high-profile media outlets, and participating in forums that consider industry structures and standards before they become part of regulation. Table 1 provides a list of these key performance indicators (KPIs), along with data on activities for each KPI over the past four months and to date in the current fiscal year.

This report covers work completed during the period from 1 April to 31 July, including work in progress as of 31 July. Future reports will provide monthly updates on CMPG AMER activities.

Completed Advocacy Work

Surveys

COVID-19 Survey — In the latter half of April, CFA Institute received responses from nearly 13,300 CFA Institute members on the effects on investment decisions and investment markets resulting from the COVID-19 virus and the related global economic shutdown, the results of which can be found at https://www.cfainstitute.org/-/media/documents/survey/cfa-amer-discussion-2020-text-2pp.ashx.

Thought-Leadership Programs

Americas COVID 19 Survey Report — A report on the responses of more than 7,500 members from the Americas region in the COVID-19 Survey can be found at https://www.cfainstitute.org/-/media/documents/survey/cfa-amer-discussion-2020-text-2pp.ashx.

Comment Letters

SEC: Accredited Investor Rule Proposal — CFA Institute responded favorably to the SEC’s proposal to adopt a competency test to become an accredited investor (AI) — including the potential for naming CFA Institute members as AIs — but objected to the Commission’s failure to call for indexing of traditional income and wealth thresholds. The letter, delivered to the SEC on 6 May, is available here.

SEC: Fund Names Rule Proposal — In its response to SEC proposals on fund names, CFA Institute supported the retention of current rules and noted the important benefit to the investment products industry from clarity and specificity to naming conventions for investment products that its omission would fail to provide. The letter is available here.

SEC: Proxy Adviser Rule proposal — In its third comment to the SEC on proposals to amend rules on when and in what circumstances proxy advisers can deliver their research to clients (the first two responses were delivered on 3 February and 4 October), CFA Institute provided views on the costs and difficulties that proposed delays on investors’ voting directions would create for investors, issuers, and the SEC with its letter delivered on 13 May.

SEC: Exempt Offerings Rule Proposal — On 12 June, CFA Institute delivered its objections to the SEC to its proposals to harmonize various private offerings rules. CFA Institute specifically objected to the SEC’s proposals to move on this before finalizing a definition for accredited investors (see SEC: Accredited Investor Rule Proposal) and to the need for the rule given the limited investor interest in such offerings in the past.

Fed Reserve Board: IRC 501(c)(6) funding — CFA Institute expressed its support for extending the Federal Reserve Board’s Main Street Lending Program in its 22 June letter to the Fed.

World Economic Forum: ESG Disclosure Proposals — In this 6 May letter to the World Economic Forum, CFA Institute expressed its support for standardized metrics and reporting on environmental, social, and governance matters.

Media Outreach

Barron’s —  “Are ETFs A New Driver in Market Volatility?” By Jim Allen, CFA, on 7 May.

680 News — The Toronto radio station interviewed Jim Allen, CFA, about the Canadian results of the COVID-19 survey conducted by CFA Institute.

The Hill “ A Curious Thing Happened on the Way to Implementing Regulation Best Interest,” by Jim Allen, CFA, on 6 July. A longer version is available at the Market Integrity Insights website here.

El Financiero/Bloomberg TV — El Financiero/Bloomberg TV interviewed Jim Allen, CFA, on July 13 about the CFA Institute survey of CFA Society Mexico members about COVID 19.   

El Financiero/Bloomberg TV — El Financiero/Bloomberg TV interviewed Jim Allen, CFA, on July 13 about the CFA Institute survey of CFA Society Mexico members about COVID-19.

Key Regulator Meetings

Finra — A virtual call was organized on 27 April as part of the Americas Management Team by Inigo Bengoechea, CFA. Finra CEO Robert Cook, and Robert Colby, Chief Legal Officer, spoke with Steve Horan, Managing Director for the Americas, Mr. Bengoechea, and Jim Allen of CMPG AMER (the AMT Representatives). The discussion included consideration of implementation of Regulation Best Interest and other rule proposals.

SEC — Commissioner Peirce — CFA Institute spoke with Commissioner Peirce on 8 May about possible alterations to the SEC’s proposed proxy adviser rules.

SEC: Office of the Chair — CFA Institute also spoke with staff from the Office of the Chair on 7 May about possible alterations to the SEC’s proposed proxy adviser rules.

Investment Industry Regulatory Organization of Canada (IIROC) — The AMT Representatives participated in a 1 June video conference with IIROC executives, including Andrew Kriegler, CEO; Irene Winel, Senior Vice President for member Regulation and Strategy; and Elsa Renzella, Senior Vice President for Enforcement and Registration. The meeting included discussions of regulatory organization changes in Canada; IIROC’s regulatory strategy; and the effects of regulatory changes in the United States resulting from Regulation Best Interest. The meeting participants also discussed the Canadian responses to the CFA Institute survey on COVID-19’s effect on financial markets.

CNBV Mexico — The AMT Representatives joined Jaime Nicolas Lazaro Ruiz from CFA Society Mexico, in a 16 June video conference with high-ranking officials with the CNBV, including José Antonio Quesada, Vicepresidente de Política Regulatoria; Ethel Sarahaim Ramírez, Director General Adjunto de Organismos Financieros Internacionales; Humberto Ahuactzin, Director General Adjunto de Prospectiva Contable; and Vanessa Veintimilla Brando, General Director. The meeting included discussions about CNBV’s work with the International Organization of Securities Commissioners (IOSCO) and efforts to increase investor access to mutual funds. The meeting also discussed responses of CFA Society Mexico members to the CFA Institute survey on COVID-19’s effect on financial markets.

Asociacion Mexicana de Instituciones Bursatiles (AMIB) — The AMT Representatives joined Jaime Nicolas Lazaro Ruiz and Mara Haddad, CFA, from CFA Society Mexico, in a 16 June video conference with high-ranking officials with the CNBV, including Alvaro Garcia Pimentel, Presidente del Consejo Directivo; Efren Del Rosal, Director General; and Everardo Rodriguez, Director de Certificación y Sistemas; and Victor Augusto Cos, Subdirector de Certificación y Registro. As in the meeting with CNBV, the discussion considered efforts to increase investor access to mutual funds and the responses of CFA Mexico Society members to the CFA Institute survey on COVID-19’s effect on financial markets.

SEC: Commissioner Peirce — CFA Institute spoke with Commissioner Peirce on 25 June about harmonization of private offering rules, and the SEC’s proposed accredited investor definition.

SEC: Commissioner Roisman — CFA Institute spoke with Commissioner Roisman on 30 June about harmonization of private offering rules, and the SEC’s proposed accredited investor definition.

SEC: Office of the Chair — CFA Institute spoke with staff from the Office of the Chair on 8 July about harmonization of private offering rules, and the SEC’s proposed accredited investor definition.

SEC: Division of Corporate Finance — CFA Institute spoke with Elizabeth Murphy, Jennifer Zepralka, Steven Hearne, Anthony Barone, Charlie Guidry, and Jeb Byrne on 30 June about harmonization of private offering rules, and the SEC’s proposed accredited investor definition.

SEC: Commissioner Lee — CFA Institute spoke with Commissioner Lee on 6 July about harmonization of private offering rules, and the SEC’s proposed accredited investor definition.

Key Legislative Efforts

Campaign for Support of 501(c)(6) Organizations — CFA Institute delivered 50 letters to Congressional and Senate officeholders, calling for inclusion of 501(c)(6) entities in the CARES Act funding programs. Staff also spoke with Virginia delegation staff members to convey our message and to obtain information on the state of pending programs.

Ongoing Legislative Outreach Virtual Meetings — During the period, CMPG AMER staff participated in update and introductory calls with staff from both the majority and minority parties in the House Financial Services Committee, along with the following members of the House and Senate during the period:

• Sen. Van Hollen (Md.)
• Rep. McAdams (Utah)
• Rep. Leutkemeyer (Mo.)
• Sen. Brown (Ohio)
• Sen. Warner (Va.)
• Rep. Axne (Iowa)
• Rep. McHenry (N.C.)
• Sen. Kaine (Va.)

Projects In Process

TLPs

Short-Termism Report — After organizing a series of meetings of members and representatives of external parties between December and January, Matt Orsagh, CFA, prepared an update to the 2006 report he helped author with the Business Roundtable Institute for Ethics. The report, “Breaking the Short-Term Cycle,” considered the short-term approaches of investors’ and securities issuers’ and recommended changes to enable a longer-term perspective from each. The new report, which will be available in August, will provide updates on those recommendations as well as new recommendations with an increased focus on ESG issues.

Comment Letters in Drafting

Department of Labor (DOL) ESG Guidance — DOL updates its rules considering the circumstances under which retirement fiduciaries may use ESG-specific instruments and investment strategies.

Department of Labor Fiduciary Duty Rules — DOL modifies its fiduciary duty rules to address the increase in investor-directed retirement plans.

SEC Form 13-F Threshold Changes — SEC proposals to significantly increase the threshold for investment firms responsible for filing Form 13-F to $3.5 billion from $100 million.

CMPG AMER Team Members:

• James C. Allen, CFA, Head
• Matt Orsagh, CFA, Senior Director
• Stephan Deane, CFA, Senior Director
• Karina Karakulova, Senior Manager

Image Credit: ©Getty/Phanuphong_Chueamunrin/EyeEm