WASHINGTON Jan 10 The securities industry is seeking a one-month delay for a batch of new regulations governing financial advisers to U.S. cities and states, telling federal regulators firms have not had time to digest an official definition of advisers spanning more than 700 pages.
That definition is expected to go into full effect next week, allowing federal regulators to begin tightening oversight of advisers who have long escaped government scrutiny. The Securities and Exchange Commission approved it in September.
"It has been impossible to properly develop compliance programs and train employees for the implementation of this new rule," wrote the Securities Industry and Financial Markets Association in a letter to the SEC late Thursday, requesting a 30-day delay as well as guidance on how the definition applies to underwriters.
"Municipal entities also appear to be unclear on critical aspects of the workings of this new rule, and have expressed concern to our members about engaging in transactions that may be subject to, or signing documents related to, the rule until after interpretive guidance is released."
The SEC declined to comment on the letter. The guidance is expected to be released on Friday.
The Dodd-Frank Act signed in 2010 requires those who consult with municipalities about selling debt or buying derivatives to register with the Securities and Exchange Commission, putting them under the same regulation as brokers and dealers, and also to carry out fiduciary duties of putting clients' interests first.
The SEC laid out the parameters of exactly who would count as an adviser nearly three years ago, but had to pull that definition after it was universally criticized as too broad.
Now that the final definition is in place, the Municipal Securities Rulemaking Board, a self-regulatory organization that writes the rules the SEC enforces, is racing to create a regimen on carrying out the Dodd-Frank provision.
More than 1,100 firms have registered as advisers since 2010, mostly under a temporary placeholder rule. The pace has picked up since the final definition was approved - with 41 firms and individuals registering since Sept. 19.