The Chairman argues that the SEC's rulebook has failed to keep pace with market evolution and technological advancements, citing the default to paper-based communications as a prime example. The 'Advance' pillar of the ACT strategy aims to bring regulations into alignment with the realities of today's algorithmic and AI-driven markets.
The speech heavily criticizes the SEC's past reliance on enforcement actions over proactive rulemaking, especially concerning digital assets. This approach created uncertainty, discouraged good-faith compliance efforts, and ultimately drove an entire generation of innovation outside the United States.
The Chairman highlights the historical friction and jurisdictional ambiguity between the SEC and CFTC, which created a 'regulatory no-man's land' for new financial products. The 'Clarify' pillar of the ACT strategy is being implemented through a new memorandum of understanding and joint guidance to harmonize rules and provide certainty.
The SEC's rules have become a 'compliance labyrinth,' shifting focus from meaningful investor information to navigating complexity. The 'Transform' pillar involves a 'first principles' review of all disclosure requirements, using the objective 'materiality' standard as its North Star to eliminate burdensome and impractical rules.
Keep pulling the thread on Hon. Paul S. Atkins.