Under the SEC Chairmanship of Gary Gensler, the US Securities and Exchange Commission (SEC) is undergoing an overhaul of its financial markets and intermediaries, keeping a close eye on the intersections of banks and non-banking entities. Amidst remarkable changes in financial markets, Gensler reveals that he is halfway through his agenda, with his planned changes yet to fully unfold. Gensler also commented on substantive issues ranging from private credit and financial stability, to complex regulations surrounding cryptocurrencies.
Efficiency and competitiveness are central to Gensler’s agenda, with the aim of attenuating the proportion taken by intermediaries in dealings between investors and issuers. The SEC Chair’s approach is cautious when it comes to blending banks and cryptocurrencies. Contentious rules, notably those associated with corporate climate disclosures and the trading structure of equities, are still on the table.
Since taking office, Gensler’s focus has remained robust on investment advisers, broker-dealers, and systems compliance and integrity. As the SEC continues to review and adapt, the timeline for finalizing rules, Gensler comments, typically falls between a 12 to 24 months period. Gensler acknowledges the criticisms that the SEC might be trying to achieve too much, but contends that the comprehensive reform is necessary for market resilience and competition.
The reduction of financial stability risks is a key area of concern for Gensler, particularly when traditional banking and non-bank sectors overlap. This occurs notably in repo and reverse repo markets where banks lend to the non-banking sector, sometimes at zero or near-zero margins. Despite some objections from banks and hedge funds that maintain the risks are often overstated, Gensler maintains a cautious stance on the matter.
Regarding the intersection of traditional finance with the emerging crypto-native firms, Gensler emphasizes the importance of adhering to existing legal norms. As Wall Street banks are exploring tokenization and hinting towards blockchain, the SEC Chair pressed the need for institutions to comply with either securities laws or the Commodity Futures Trading Commission’s rules, as applicable.
Read the full interview with Gensler on Bloomberg Law.