Despite controversy over a proposal to reign in the bonuses of Wall Street executives, the Securities and Exchange Commission voted 3-2 to issue for comment a plan to reduce incentives and prohibit institutions from maintaining compensation arrangements that encourage “inappropriate risks.”

The plan is similar to one proposed by the Federal Deposit Insurance Corp last month and stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act. At financial institutions, as well as hedge funds, with total assets of $1 billion or more these firms are required to disclose the structure of their incentive-based compensation arrangements so the regulator can decide whether the bonus is excessive or could lead losses to the firm, the SEC said in meeting notes on Wednesday.

Executives at firms with $50 billion in assets or more would be required to defer at least half of their bonuses for three years.

There was concern about how the proposal would impact large firms, especially when it comes to recruiting and retaining top employees. Some think the limit to bonuses will keep large brokerage firms and financial advisory companies from being competitive.

SEC Chairman Mary Schapiro said she wanted “to be very attuned to unintended consequences” and would be interested in hearing views about how the proposal would impact private fund advisors as well as other brokers' and advisors'.

Meanwhile, the SEC also laid out three other proposals: 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.

The proposal to remove credit ratings caused a stir because regulators have had a hard time finding a substitution for the ratings.

The SEC voted unanimously Wednesday to do away with the requirement that money-market funds invest 97% of their assets in “highly liquid short-term investments of the highest quality.” Instead, the SEC will replace that with a new standard: a money market fund’s board of directors (or its delegate) must determine that the security presents minimal credit risks.

All the proposals will be followed by a public comment period  that will be open through April 25. A second vote by the commission is required before the proposal will be made final.