The Unprecedented Speed and Volume of SEC Rulemaking

The SEC’s agenda is unprecedented. Data demonstrates that concerns about the speed and volume of its rulemaking are well-founded. In this post, we explain why.

Throughout the last two years, stakeholders from a variety of industries and members of Congress from both sides of the aisle have expressed concerns with the speed and volume of new rule proposals from the U.S. Securities and Exchange Commission (SEC). The data demonstrates that these concerns are well-founded.

According to the Agency Rule List from Spring 2023, the SEC is on track to propose and finalize 63 new rules by the end of the current Chair’s first four years in office.

This represents a dramatic increase in the pace of rulemaking from the previous two Chairs, Chairs Mary Jo White and Jay Clayton, who finalized 22 rules and 43 rules, respectively, that they had proposed. The chart below (the associated data set is available here) compares the number of rules that each Chair both proposed and finalized. As of September 20, 2023, of the 63 rules on Chair Gensler’s docket, 16 have been proposed and finalized, 33 have been proposed but not yet finalized, and 14 have not yet been proposed. In addition, the average public comment period for SEC rule proposals during Chair Gensler’s tenure has been only 46 days (measured from the date a proposal is published in the Federal Register). That is nearly 20 percent fewer days than the average comment period during the previous Chairs’ tenures.

To view the latest data, please visit our updated SEC Rulemaking Tracker.

This chart helps illustrate one of the primary concerns with the current Commission’s rushed approach to rulemaking: attempting to finalize nearly 50 percent more new rules than the prior SEC Chair increases this risk of undermining the quality of the proposals. Truncated timelines for comment on multiple overlapping rules limit staff research and analysis and impede stakeholders’ ability to sufficiently comment. The inability of the public and the SEC to adequately analyze the cumulative effects of interconnected proposals that were issued in a piecemeal fashion, or some combination thereof, further increase the potential for negative outcomes for our capital markets and, importantly, investors and issuers.

Concerns over the deleterious consequences of rapid-fire rulemaking have been raised by a diverse range of stakeholders.

This concern is exemplified by the emerging pattern of the SEC re-opening the comment periods of recently proposed rules, often after making only slight changes, providing additional context that should have been disclosed in the initial release, or proposing or adopting a rule that interacts, and possibly conflicts, with the proposal that is being re-opened. The Commission has reopened comment periods for rules (eight) at quadruple the combined rate of the prior two Commissions (two) at the same point in their respective tenures.

It is vital that the SEC focus on making certain the rules it proposes are written and analyzed thoroughly, rather than rushed to finalization with less than historic levels of robust public engagement. The SEC has a duty to ensure the changes they make to our capital markets are thoughtful and protect the health of our financial system. Our capital markets are too important to be put at risk.

Kenneth E. Bentsen, Jr. is President and CEO of SIFMA. From 1995 to 2003, he served as a Member of the United States House of Representatives from Texas. Prior to his service in Congress, Mr. Bentsen was an investment banker specializing in municipal and housing finance.