April 5, 2022

Via Electronic Submission

Honorable Gary Gensler
Chair
U.S. Securities and Exchange Commission
100 F Street N.E.
Washington, DC 20549

Re: Importance of Appropriate Length of Comment Periods

Dear Chair Gensler:

As you have highlighted in many contexts, the U.S. Securities and Exchange Commission’s (Commission) tripartite mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.1 The rules crafted and enforced by the Commission are the vital foundation of the Commission’s critical mission objectives. The Associations,2 however, are concerned that meaningful public input into the rulemaking process, a pivotal element of ensuring that the Commission’s rules are appropriately tailored and that the Commission is meeting its statutory obligations and tripartite mission, is at risk of being lost in the Commission’s current rulemaking agenda. Sufficient time for meaningful public input into individual proposals and more holistically on the Commission’s rulemaking agenda and the possible interconnectedness of these proposals is vitally important and ultimately could have a significant impact on savers, investors, capital formation, and economic growth and job creation.3

 

1 See, e.g., Speech, Chair Gensler, Dynamic Regulation for a Dynamic Society (Jan. 19, 2022) and Speech, Chair Gensler, Prepared Remarks Before the SIFMA Annual Meeting (Nov. 2, 2021) (stating “[t]he [Commission] has a three-part mission: protecting investors, facilitating capital formation, and maintaining that which is in the middle: fair, orderly, and efficient markets.”), available at https://www.sec.gov/news/speech/gensler-sifma-110221. See also SEC Website, “What We Do,” (stating “. . . we have stayed true to our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”), available at https://www.sec.gov/about/what-we-do, and Section 3(f) of the Securities Exchange Act of 1934, 15 U.S.C §78c(f) (stating “[w]henever pursuant to this chapter the Commission is engaged in rulemaking, or in the review of a rule of a self-regulatory organization, and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.”).

2 Alternative Credit Council (ACC); Alternative Investment Management Association (AIMA); American Bankers Association (ABA); American Council of Life Insurers (ACLI); American Investment Council (AIC); Bank Policy Institute (BPI); Bond Dealers of America (BDA); FIA Principal Traders Group (FIA PTG); Financial Services Forum (FSF); Institute of International Bankers (IIB); Institute for Portfolio Alternatives (IPA); Investment Adviser Association (IAA); Investment Company Institute (ICI); Loan Syndications and Trading Association (LSTA); Managed Funds Association (MFA); National Association of Corporate Treasurers (NACT); National Association of Investment Companies (NAIC); National Venture Capital Association (NVCA); Real Estate Roundtable (RER); Risk Management Association (RMA); Securities Industry and Financial Markets Association (SIFMA); Securities Industry and Financial Markets Association Asset Management Group (SIFMA AMG); Security Traders Association (STA); Small Business Investor Alliance (SBIA); and U.S. Chamber of Commerce (the Chamber) Center for Capital Markets (CCMC) (collectively, the Associations). Descriptions of the Associations are included in the attached Appendix.

3 See generally Speech, Chair Gensler, Remarks at Interagency Convening on Equitable Economic Growth (Nov. 9, 2021) (stating “[the Commission] covers nearly every part of the $110 trillion capital markets. Those markets touch many Americans’ lives. Whether they’re investing for their future, borrowing for a mortgage, taking out an auto loan, or taking a job with a company that’s tapping our capital markets. . . .” and “[m]ore and more retail investors are accessing the markets. Thus, more and more people require the protections of our securities laws.”), available at https://www.sec.gov/news/speech/gensler-interagency-convening-equitable-economic-growth-110921. See also Hester Peirce, Regulating through the Back Door at the Commodity Futures Trading Commission, Mercatus Working Paper (Nov. 2014) (stating “[n]otice-and-comment rulemaking benefits agencies, regulated entities, and the public. Regulators typically need input from regulated entities that often have the necessary technical expertise to forecast what the consequences of a rule will be for them specifically or the industry as a whole, identify where problems are likely to arise, and suggest potential alternatives. It is also important for an agency to hear from the parties the rules are intended to protect. They may want more, less, or a different type of protection than the agency is proposing. Agencies also can gain useful insights from other interested parties, including other regulators, members of competing industries, and members of Congress. An important part of the process is the discussion among commenters, which can be useful to the agency in weighing the pros and cons of the proposal and different commenters’ positions.”), available at https://www.mercatus.org/system/files/Peirce-Back-Door-CFTC-summary.pdf.

Rulemaking and rule implementation is a symbiotic relationship between the Commission and the financial services industry. The industry is tasked with operationalizing the rules issued by the Commission. An example of how well this process can work is the current effort around transitioning to a T+1 environment.

3 See generally Speech, Chair Gensler, Remarks at Interagency Convening on Equitable Economic Growth (Nov. 9, 2021) (stating “[the Commission] covers nearly every part of the $110 trillion capital markets. Those markets touch many Americans’ lives. Whether they’re investing for their future, borrowing for a mortgage, taking out an auto loan, or taking a job with a company that’s tapping our capital markets. . . .” and “[m]ore and more retail investors are accessing the markets. Thus, more and more people require the protections of our securities laws.”), available at https://www.sec.gov/news/speech/gensler-interagency-convening-equitable-economic-growth-110921. See also Hester Peirce, Regulating through the Back Door at the Commodity Futures Trading Commission, Mercatus Working Paper (Nov. 2014) (stating “[n]otice-and-comment rulemaking benefits agencies, regulated entities, and the public. Regulators typically need input from regulated entities that often have the necessary technical expertise to forecast what the consequences of a rule will be for them specifically or the industry as a whole, identify where problems are likely to arise, and suggest potential alternatives. It is also important for an agency to hear from the parties the rules are intended to protect. They may want more, less, or a different type of protection than the agency is proposing. Agencies also can gain useful insights from other interested parties, including other regulators, members of competing industries, and members of Congress. An important part of the process is the discussion among commenters, which can be useful to the agency in weighing the pros and cons of the proposal and different commenters’ positions.”), available at https://www.mercatus.org/system/files/Peirce-Back-Door-CFTC-summary.pdf.