Financial Reform Package
I’m posting an e-mail I received this morning about what the CFA Institute has been lobbying for with regards to relevant financial regulatory reform. It highlights the CFA Institute’s commitment to the integrity of the financial industry and the investment advisory profession. It also highlight the aspects of the bill that are the most important for consideration, to help further better operating markets in the future:
Dear CFA Institute Member:
As Congress prepares to consider the most significant financial reform package since the 1930s, we want to alert you to last minute efforts to derail these important reform efforts.
Both houses of Congress are preparing to vote on a financial market reform bill that addresses the most important aspects of regulatory reform. Many of these were identified and addressed last July in the report of the Investors’ Working Group (IWG), which CFA Institute co-sponsored with the Council of Institutional Investors.
Specifically, the four areas on which we have worked most carefully with legislative staff over the past several months are in the package. While the bill is not perfect by any means, the time to begin the regulatory reform process is long overdue. We are concerned that the entire effort not be further delayed or scuttled altogether, by commercial lobbying and banking interests opposed to footing some of the costs of regulatory reform. In the view of many of our members, such costs must not be the sole responsibility of investors and taxpayers.
Getting this process of reform underway is of particular importance to investors, and we believe now is the time to let Congress hear investors’ views. Assuming the legislation passes both houses of Congress, the real work of developing the implementing regulations will be our next focus for investor input. Each issue below was a focus of the IWG, and each was supported by CFA Institute members in subsequent surveys.
Systemic Risk
- Congress should establish new systemic risk management procedures. The bill creates a new council and additional resources to advance the monitoring and mitigation of new systemic imbalances. The bill is a start for making certain that regulators and regulated firms are focused on disclosure and analysis of relevant systemic risk information.
Fiduciary Duty
- All investment advisers and brokers who provide investment advice to investment clients should be subject to a fiduciary duty in the view of a strong majority of our members. The bill directs the SEC to study such action and develop a plan for implementation over the next six months.
Derivatives Reform
- The bill makes progress toward having all OTC standardized and standardizable derivatives to be traded on regulated exchanges and cleared centrally.
- The bill does permit other OTC derivatives trading, but seeks to limit this to truly customized contracts and legitimate hedges of business risk. We will be advocating for tighter implementing regulations.
Corporate Governance
- Shareowners will have the right to cast advisory votes on executive pay.
- The SEC is directed to move forward on allowing shareowners to place director nominees on company proxy statements, so called “proxy access.”
Contact Members of the House and Senate to Register Your Views.
We urge you to contact your representatives in Congress to express your views on whether financial reform legislation gets enacted and whether the four areas noted above, in particular, are advanced in the interest of investor protection. Find contact information for your representatives.