SEC unveils goals for next 4 years

Technology and data are top of mind for the SEC in the initial draft of its strategic plan for fiscal years 2018–2022.

The SEC sets three goals in the document, which was released for comment on Tuesday, but the overarching theme is the need for the commission to improve its ability to react to and employ new technologies that are changing the nature and speed of investing.

“Our securities markets and the technologies that support those markets and our internal operations are also evolving and innovating at a fast pace,” the SEC writes in the draft. “These changes present numerous benefits, as well as challenges. Future success requires the SEC to be efficient and nimble in the allocation of our resources.”

The goals in the draft are as follows:

• Goal 1: Focus on the long-term interests of Main Street investors. The SEC will look to gain a deeper understanding of the different types of investors participating in the capital markets. The commission will look to better serve retail investors by updating outreach and education efforts, expanding enforcement in areas such as penny stock trading and securities custody, and modernizing the design, delivery, and content of disclosures to provide investors with readable, timely, and useful information. The SEC also will seek to grow the number of companies that are SEC-registered and exchange-listed.

• Goal 2: Recognize significant developments and trends in evolving capital markets and adjust efforts to ensure the commission is effectively allocating its resources. The rapid transmission of data and the interconnectedness of global information systems have changed the nature of investing at all levels. Many trades are executed via algorithms on digital platforms, instead of through traditional personalized services. Moreover, technology has made global markets interconnected and interdependent but has also opened the door for cybersecurity and global risks to affect the U.S. markets. To respond to this new reality, the SEC will seek to modernize its rules and approaches to better respond to global events and to better address cyber and other infrastructure risks.

• Goal 3: Elevate the SEC’s performance by enhancing analytical capabilities and human capital development. With this goal, the SEC would seek to expand the use of risk and data analytics to set regulatory priorities and focus staff resources. In addition, the commission would develop a data management program; enhance its market and industry data analytics to prevent, detect, and prosecute improper behavior; and enhance its abilities to mitigate threats to its systems and sensitive data. The SEC also would focus on recruiting, retraining, and training staff with the “right mix of skills.”

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.