H.J.Res.53 - Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to Form N–PORT and Form N–CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs. (119th Congress)
Summary
H.J.Res.53 is a joint resolution introduced in the House of Representatives aiming to disapprove a rule submitted by the Securities and Exchange Commission (SEC). The rule in question relates to Form N-PORT and Form N-CEN reporting, as well as guidance on Open-End Fund Liquidity Risk Management Programs. The resolution seeks to nullify the SEC's rule, preventing it from having any force or effect.
The resolution utilizes the Congressional Review Act (CRA), which allows Congress to review and potentially disapprove new agency rules. If passed, this resolution would effectively overturn the SEC's regulatory action.
The joint resolution was submitted by Mr. Clyde and referred to the Committee on Financial Services.
Expected Effects
If H.J.Res.53 is enacted, the SEC rule concerning Form N-PORT and Form N-CEN reporting, along with guidance on Open-End Fund Liquidity Risk Management Programs, will be invalidated. This means the SEC's specific requirements and guidance outlined in the rule would not be enforced.
This could lead to changes in how open-end funds report their portfolio information and manage liquidity risks. The practical effect would be a reversion to the regulatory landscape that existed before the SEC's rule was implemented.
The impact would primarily be felt by investment companies, fund managers, and investors in open-end funds, as it alters the regulatory framework governing their operations and reporting obligations.
Potential Benefits
- Could reduce compliance costs for investment firms if the SEC rule is deemed overly burdensome.
- May allow for more flexibility in how funds manage liquidity risk, potentially leading to higher returns.
- Could prevent unintended consequences of the SEC rule if it is flawed or poorly designed.
- Might foster innovation in fund management by avoiding prescriptive regulations.
- Could address concerns raised by industry stakeholders regarding the practicality or effectiveness of the SEC rule.
Potential Disadvantages
- Could increase systemic risk if the SEC rule was intended to improve fund liquidity management and prevent crises.
- May reduce transparency for investors if the reporting requirements are weakened.
- Could lead to less informed investment decisions due to reduced data availability.
- Might create uncertainty in the market if the regulatory landscape becomes unstable.
- Could undermine the SEC's authority and ability to regulate the financial industry effectively.
Constitutional Alignment
This resolution is an exercise of Congress's legislative powers under Article I, Section 1 of the US Constitution, which vests all legislative powers in the Congress. The Congressional Review Act, under which this resolution is brought, is a mechanism by which Congress can check the power of the executive branch and its agencies.
By disapproving the SEC's rule, Congress is asserting its authority to oversee and regulate the implementation of laws. This aligns with the principle of separation of powers and checks and balances.
However, the specific content of the SEC rule and its impact on various sectors would need to be examined to determine if it infringes upon any other constitutional rights or principles.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).