Are financial services regulatory issues exciting? Not always. Are they important? Absolutely.
We’re living in an era of heightened legal scrutiny – as well as heightened scrutiny in the court of public opinion. As a result, financial services firms and marketers must track regulatory changes and prepare for the consequences of these changes.
It is turning into a busy year for U.S. financial services regulators. Here are a few themes that we’re tracking:
Cybersecurity a serious threat to human civilization
Cyber threats are a serious issue to all businesses, especially those in the financial services industry. Staying ahead of these threats is an important issue in 2019 and will continue to be for many years to come.
As firms try their best to stay ahead of the criminals, regulatory bodies must provide supportive, thoughtful and measured leadership to firms in the financial services industry.
Currently, various legislative bodies are looking to introduce new cybersecurity and privacy laws. Meanwhile, regulators are exploring ways to help their firms protect against cyber threats and maintain proper disclosure requirements should an attack occur.
Fiduciary rule is dead, long live the best interest rule
In the U.S., the Department of Labor’s Fiduciary Rule appears to have come to an end. After numerous delays, the Fiduciary Rule proposal was finally abolished in 2018.
Eliminating conflict of interest issues remains a priority. As a result, some state regulators, as well as the U.S. Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA”), have created their own proposals that are similar, in theory, to the Fiduciary Duty, in an effort to eliminate or reduce conflicts of interest. The SEC has also come forward with a proposed best interest rule. This will continue to be an important topic for regulators until an acceptable resolution is found.
Tales from the cryptocurrency
Will we see cryptocurrency and, more specifically, bitcoin go mainstream?
The SEC declined bitcoin exchange-traded funds in 2018, given the risk of market manipulation and liquidity issues that accompany these investment options. Will the SEC’s stance change in 2019? Various regulators within the U.S. are looking to standardize cryptocurrencies, which could help them become more mainstream.
There are many unknowns that remain regarding cryptocurrencies, and regulators will try to stay on top of these potential pitfalls by developing regulations for cryptocurrencies as they transition into a new asset class. Regardless, regulators’ focus will continue to be protecting investors and financial markets.
Overall, 2019 is turning into a busy year for U.S. regulators as the financial services industry continues to evolve.