US SEC Chairman Joins Investor Advisory Committee

03/03/2023 01:57 • Metaverse & Beyond • 73 views

On March 3, Gary Gensler, the chairman of the US SEC, said in an article on the official website of the SEC that he had joined the Investor Advisory Committee. The committee recently submitted a new investment adviser protection rule. According to the provisions of Congress in 2010, this rule extends the custody rule to cover all assets of investors, not just their funds or securities. The proposed rules will also require a written agreement between the consultant and the custodian, increase the requirement for foreign institutions to act as the custodian, and explicitly extend the safeguard rules to discretionary transactions.

The Chairman of the US SEC said that the new rules were being drafted, and the encrypted trading platform might not be a qualified custodian

Interpretation of the news:

The US Securities and Exchange Commission (SEC) Chair, Gary Gensler, recently joined the Investor Advisory Committee (IAC), which has submitted a new investment adviser protection rule. The proposed rule, in accordance with the provisions of Congress in 2010, intends to expand the scope of the custody rule beyond funds or securities and cover all assets of investors. The rule also requires consultants and custodians to form a written agreement, increases the requirements for foreign institutions to act as custodians, and explicitly extends safeguard rules to discretionary transactions.

This message implies that the SEC is taking important steps to protect the interests of investors. The new investment adviser protection rule proposes changes to the custody rule and makes it more comprehensive, encompassing all assets of investors, not just their funds or securities. This extension will ensure that investment advisers have a fiduciary duty to safeguard investors’ assets and reflect the SEC’s concern for investor protection.

Under the proposed rule, consultants and custodians are required to form a written agreement, which will make it easier to determine each party’s obligations and responsibilities. This requirement will lead to greater transparency and more secure transactions, as the agreement will list the actions that each party promises to perform.

The proposed rule also increases the requirements for foreign institutions to act as custodians. This increased scrutiny and regulations will ensure that foreign institutions are held to the same standards as domestic institutions, increasing investor trust and confidence.

Lastly, the rule explicitly extends the safeguard rules to discretionary transactions. This provision will ensure that investors’ assets in discretionary transactions are adequately protected, preventing investment advisers from exploiting any gaps in the regulations.

Overall, the SEC’s new investment adviser protection rule is an important step towards creating a more transparent and secure investment landscape. The message highlights the SEC’s commitment to investor protection and ensuring that investment advisers have a fiduciary duty to protect their clients’ best interests.

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