September 15, 2017

[email protected]

US Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

Reference: RIN 1210-AB82

Ladies and Gentlemen:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to respond to the Department of Labor’s (“Department”) Extension of Transition Period and Delay of Applicability Dates (“Extension”).2 We support the Department’s proposed 18-month delay of the January 1, 2018 applicability date of the provisions in the Best Interest Contract Exemption, the Principal Transaction Class Exemption, and Prohibited Transaction Exemption 84-24 (together, the “Exemptions”) relating to the redefinition of the term “fiduciary” under section 3(21) of ERISA and section 4975(e) of the Code (the “Rule”) that are not now in effect, along with the other amended exemptions as part of this rulemaking.

The Delay Will Provide Additional Certainty

As we made clear in our letters of July 14, 20173 and August 10, 2017, 4 we believe a significant delay, designed to cover the period it takes for the Department to complete the review required by the President’s February 3 memorandum, to propose revisions to the Rule and any necessary Exemptions, and to permit the industry and consumers to make appropriate adjustments after the Rule and Exemptions are finalized, is critical. Such a delay would provide certainty to investors and the financial services industry, and would prevent the continued expenditure of significant amounts for systems, products or processes required by a Rule and Exemptions that almost certainly will undergo significant changes.

We appreciate the Department’s request for comments on various delay approaches that, in whole or in part, would be tied to the occurrence of certain events, such as the completion of the President’s required study or the publication date of a final Rule and Exemptions, as well as on “tiered” approaches that would tie the delay to the earlier or later of several dates or events.

We believe that a tiered approach extending the delay to the later of the 18-month period the Department proposed and a period ending 24 months after the completion of the review and publication of final rules will best avoid the confusion, uncertainty and cost associated with continued piecemeal delays. We believe a tiered approach that adopts a date certain but extends to a period that will be needed after a new Rule and Exemptions ultimately are adopted is the best way to assure the industry and retirement investors that they will not have to adjust to a set of regulations that likely will never come into effect and that they will have sufficient time to make whatever adjustments ultimately will be needed. We believe an approach that tied a delay to the earlier of two dates likely would have exactly the opposite effect, and would create a circumstance where industry and retirement investors always had to plan for the earliest possible applicability date (since they would never know when the event triggering the earlier date might occur). Our experience so far in assessing the time necessary to implement changes to the Rule proposed by the Department informs our belief that we will need at least 24 months after the Rule and Exemptions are finalized to be prepared for implementation, and we believe extending the delay to cover that period will provide sufficient certainty to the industry and retirement investors that after final rules are adopted there will sufficient time to thoughtfully implement them and that there will not be a continued series of starts and stops and piecemeal delays.5

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1 SIFMA represents the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 Dept. of Labor Notice of proposed amendments to PTE 2016-01, PTE 2016-02, and PTE 84-24, 82 Fed Reg. 41365 (August 31, 2017).

3 https://www.sifma.org/resources/submissions/the-delay-of-the-january-2018-applicability-date/

4 https://www.sifma.org/resources/submissions/request-for-information-regarding-the-fiduciary-rule-prohibitedtransaction-exemptions/

5 Some commenters have argued that the Department does not make a rational case that the delay will be necessary. This project was commenced in 2010 and it is not yet completed. The latest rule was proposed in 2015 and not final until 2017. We think there is a high probability that it will take a minimum of 18 months for the review mandated by the President, issuance of proposed changes, an appropriate comment period, and then issuance of a final rule.