Gensler Speech Addresses Dynamic Regulation And Market Modernization

Cadwalader | Steven D. Lofchie | Jan 24, 2022

SEC Chair Gary Gensler urged regulators to update policy and monitor economic changes as part of a dynamic approach to regulation.

In prepared remarks before the Exchequer Club of Washington, D.C., Mr. Gensler highlighted two principles important to dynamic regulation: efficiency in capital markets and rules modernization.

On capital markets efficiency, Mr. Gensler noted the SEC’s role in promoting fair markets by lowering the costs of financial intermediation. He encouraged greater competition and transparency as key pillars of efficiency, and directed SEC staff to foster competition and transparency throughout the financial sector. Mr. Gensler hoped this focus on transparency and competition would help both issuers and investors.

See:  Gensler’s Updated Regulatory Agenda Critized by SEC Commissioners Peirce and Roisman (Exempt Securities)

With regard to modernization, Mr. Gensler described the SEC’s history of adapting to emergent technologies and emphasized the need for more dynamic regulation. While acknowledging cryptocurrency as one area of technological advancement, Mr. Gensler focused on artificial intelligence and predictive data analytics as potentially revolutionary developments for the SEC to watch closely in the coming decade. He also pointed to non-technological developments, such as special-purpose acquisition companies and direct listings, as important areas for the SEC’s consideration.

Mr. Gensler addressed public speculation on the timeline of new SEC rules publication by focusing on flexibility and “getting proposals right” rather than trying to prioritize any one area over another.

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