Sen. Rounds leads Republican senators opposed to Regulation SCI expansion

U.S. Sen. Mike Rounds (R-SD) is leading a group of eight Senate Republicans who are opposed to a proposal by the Securities and Exchange Commission (SEC) to expand Regulation Systems Compliance and Integrity (SCI), or Regulation SCI.

Regulation SCI was adopted in 2014 to address technological vulnerabilities in the U.S. securities markets and improve SEC oversight of the core technology of key U.S. securities markets entities. To reflect technological developments in the markets, the SEC is now seeking to expand the scope of SCI entities to include registered security-based swap data repositories; all clearing agencies that are exempt from registration; and certain large broker-dealers.

Rounds and his colleagues said the proposal would impose huge costs on businesses that would ultimately be borne by retail investors. The senators also cited the SEC’s poor economic analysis, the high cost of compliance and the negative impact this proposal would have on the marketplace.

“The rule appears to be a regulatory solution in search of a problem and could result in significant costs and competitive distortions for a select group of market participants,” the senators wrote in a letter to SEC Chair Gary Gensler. “The Commission now proposes to extend Reg SCI to an entirely different set of market participants – broker-dealers – without adequately demonstrating the necessity or appropriateness of doing so, as required by the Administrative Procedure Act. We are concerned that the Proposal has the potential to negatively affect market liquidity, efficiency, and competition.”

Joining Crapo in opposition to the proposal are Sens. Thom Tillis (R-NC), John Kennedy (R.-LA), Bill Hagerty (R-TN), Cynthia Lummis (R-WY), Katie Britt (R-AL), Kevin Cramer (R-ND), and Steve Daines (R-MT).

Rounds and his colleagues are asking the SEC to provide answers addressing their concerns by April 30.

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