Securities and Exchange Commission Chairman Mary Schapiro asked for market participants' "good faith" input Tuesday on the host of rules the agency must draft to enforce the financial reform law.
The law gives the agency authority to adopt controversial rules giving shareholders access to corporate voting. The SEC proposed the "proxy access" rule last year, and it faces staunch opposition from business groups.
Speaking to the U.S. Chamber of Commerce, Schapiro said she expects that proxy access rules "will generally be in effect in time for the 2011 proxy season." This means the rules would be completed within the next few months.
The chamber is among the groups most vocally opposed to a proxy access rule.
Not everyone agrees about the law's intent, and Schapiro said detailed public comment will be crucial for helping the agency draft its rules. "The process of establishing regulations works best when all stakeholders are engaged and contribute their combined talents and experiences," she said.
The SEC has created a series of e-mail boxes for people's comments in the areas the agency will be drafting rules — over-the-counter derivatives, hedge funds, credit rating agencies and uniform standards for broker-dealers and investment advisers, to name a few.
On derivatives, the SEC is to collaborate with the Commodity Futures Trading Commission on rules to define how the two agencies will regulate the complex products, Schapiro said. "CFTC and SEC will engage in joint rulemaking regarding issues including the definition of key terms — 'swap,' 'security-based swap' and 'mixed swap,' " she said.
The financial community has already raised questions about how those terms will be defined, wondering how regulators will keep up with the ever-evolving products.
On broker-dealer standards, Schapiro said she is pleased the new law gives the SEC the authority to enforce a uniform fiduciary standard for both dealers and investment advisers. She has advocated a new uniform standard since becoming chairman.
On hedge funds, the SEC has been working closely with European regulators, she said, to coordinate how these private funds will register with the SEC and also meet foreign criteria.
On credit rating agencies, the SEC will look for conflicts of interest between investment banks and the firms that rate their products, Schapiro said. "Given the performance of highly-rated structured finance product offerings in recent years, addressing this issue is of particular interest and importance," she said.
The SEC also has teed up rules on corporate disclosures that focus on executive compensation and proxy voting issues.
"These areas are quite complex, and we expect public comments from those 'in the trenches' of corporate disclosure to be particularly valuable," Schapiro said.
