UPDATE 1-U.S. SEC faces tight schedule as holiday season approaches

Sarah N. Lynch
Thursday, 21 Nov 2013 | 5:15 PM ET

* Volcker rule to ban banks' proprietary trading under review

* Other Dodd-Frank, JOBS Act rules under consideration

* SEC mulls rules to strip out credit-rating references

* Asset-backed securities rules also in the works

WASHINGTON, Nov 21 (Reuters) - With the year-end holidays ahead, U.S. securities regulators are drowning in a sea of paper as they struggle to put the finishing touches on a handful of draft rules that collectively run well over 1,000 pages, people familiar with the matter said.

The most time-consuming rule under review is the Volcker rule to ban proprietary trading by banks, a measure that must win support from five different regulatory agencies.

But Securities and Exchange Commission Chair Mary Jo White, who has a reputation for getting by with little sleep and sending e-mails at 2 a.m., is driving a tight agenda.

Besides the voluminous Volcker rule, the SEC is reviewing other proposals and final rules touching everything from credit ratings and asset-backed securities to private securities offerings and derivatives, several people told Reuters.

"She's been pushing a fairly tough schedule," said one person familiar with the workload at the SEC.

Part of the reason for the flurry of rule drafts could be the organizational changes that White is making.

She has previously said she is trying encourage the staff to divide up the labor so people are freed up and more than one rule can be worked on at a time.

But while that helps clear the plates of some career SEC employees, it does not make things easier for the SEC's five commissioners, each of whom has only four people in their offices to help them vet the rules before they are put to a vote.

It is unclear when all of the various pending rules will be ready for a vote.

The SEC is tentatively considering a Dec. 18 date for a public meeting to vote on the Volcker rule, people familiar with the matter have said

The timing, however, is up in the air in part because Democratic Commissioner Kara Stein and Commodity Futures Trading Commission Chairman Gary Gensler recently asked for changes to the draft of the Volcker rule amid concerns that it is not tough enough, one person told Reuters.


In addition to the Volcker rule, some other key regulations could make it across the finish line before the new year.

The SEC is trying to play catch-up on one provision in the 2010 Dodd-Frank law, for instance, that requires regulators to strip credit-rating references out of federal regulations.

This requirement was inspired by the 2007-2009 financial crisis, after investors placed too much trust in the ratings of subprime mortgage debt.

The SEC is mulling several final rules to strip references to ratings out of its regulations, people told Reuters.

One of those measures would remove the rating references from the net capital rules for broker dealers, sources said.

A second one, meanwhile, would strip out references to ratings in certain rules for mutual funds that relate to the securities collateralizing repurchase agreements, another person said.

Yet another proposed rule driven by the Dodd-Frank law is a roughly 500-page regulation on record-keeping and reporting requirements for security-based swaps, such as certain credit derivatives.

In recent months, the SEC has also been trying to finish an asset-backed securities rule that predates Dodd-Frank, but which was later reproposed following the enactment of the 2010 law, several people have said.

The asset-backed securities rule aims to help improve disclosure by requiring issuers to give investors more details about the assets underlying the securities in prospectuses for public offerings.

Apart from the Dodd-Frank law, the SEC is also working to complete other rules required by the 2012 Jumpstart Our Business Startups (JOBS) Act, a law that relaxes securities regulations to help small businesses raise capital.

The SEC had initially hoped to release a proposal sometime this month that would increase the amount of money that can be raised for certain private deals - to $50 million from $5 million - under a rule known as "Regulation A," one person said.

It remains unclear whether the SEC will be able to complete the proposal before the year ends, but the agency is striving to release it for public comment in December, the person added.