The U.S. Securities Industry Association says that it welcomes the Securities and Exchange Commission’s proposal to establish a new regulatory framework for holding companies of securities firms or investment banks.
Such companies would be able to register voluntarily with the SEC as their consolidated regulator and utilize efficient capital-risk management strategies.
The SIA says that one of the most significant benefits will be the ability of investment banks to use their internal risk-management models in the determination of their capital adequacy.
“Based upon our initial review, we want to congratulate the SEC on taking a major step forward in modernizing the regulatory framework for the securities industry,” Marc Lackritz, SIA’s president, said. “The proposal will create a new registration category and provide the SEC with the ability to regulate a broker-dealer’s parent company and its affiliates on a consolidated basis, thereby expanding the scope of the SEC’s examinations and reporting requirements.”
Lackritz noted that the SEC has built upon its experience gained from the oversight of the risk-based capital regime of limited purpose broker-dealers (so-called b/d lite entities, which are over-the-counter derivatives dealers) to advance the use of similar concepts in the capital framework applicable to fully regulated firms.
“This change represents perhaps the single most important element of the SEC’s action — the rationalization of capital requirements to more accurately match the risks taken. If the proposal establishes a workable framework for investment banks, the SEC deserves to be congratulated for a major evolution in industry regulation,” Lackritz said.
U.S. securities industry welcomes new regulatory framework
Proposal gives SEC ability to regulate a brokerage’s parent company and its affiliates on a consolidated basis
- By: IE Staff
- October 9, 2003 October 9, 2003
- 15:10