The Securities and Exchange Commission was ready to vote on four proposals on Wednesday, including limiting bonuses to Wall Street executives, new governance rules for clearinghouses, the removal of credit-ratings impacting money market mutual funds, and reopening the public comment period on a proposal to limit the control big banks have in governing clearinghouses.
These proposals are four of the 100 new rules that the SEC plans to implement as part of the Dodd-Frank Wall Street reform law.
The proposal to limit bonuses would require brokers, dealers and investment advisors with assets of over $1 billion to disclose bonuses, and would limit their ability to take excessive risks. Executives at firms with $50 billion in assets or more would have at least half of their bonuses deferred for three years. Wednesday's proposal from the SEC is similar to one issued by the Federal Deposit Insurance Corp.
The proposal to remove credit-ratings affecting money-market funds is in response to the Dodd-Frank Wall Street reform law, which requires federal agencies to remove references to credit ratings so that the markets do not rely on them. The reason is that just prior to the market meltdown credit raters gave sterling ratings to investments that were linked to sub-prime mortgages.
Meanwhile the SEC was ready to reopen the comment period on a plan to place limits on the voting power that financial firms can have over derivatives clearinghouses and trading facilities. This proposal has stirred controversy with Wall Street firms saying it would discourage them from investing in start-ups.
A public comment period will follow all the proposals. There will also be a second vote by the commission before the proposal will be made final.