Oct. 13, 2023
Greetings Chair Gensler, Addressing the Inherent Implications of “Safeguarding Advisory Client Assets”, Release No. IA-6240 (Feb. 15, 2023) With all due respect, I find myself compelled to elucidate my reservations regarding the Securities and Exchange Commission’s ambitious proposal concerning the safeguarding of advisory client assets. 1. Economic & Jurisdictional Ambiguities: • The proposal seems to delineate a marked departure from well-established custody practices, potentially exacerbating the fiscal demands of proffering custodial services. • By potentially encroaching beyond its jurisdictional purview, the SEC might inadvertently destabilize the delicate regulatory equilibrium. 2. Redefining Traditional Custodial Paradigms & Digital Assets: • The envisaged regulations hint at a radical metamorphosis of time-tested custody norms. • The all-encompassing approach could inadvertently compromise the quintessential tenets of banking and unduly strain the burgeoning digital assets sphere. 3. Effects on Commodity Markets: • Introducing an intricate transaction verification methodology may cast unwarranted aspersions on commodity markets, engendering macroeconomic perturbations. 4. Investor Protection Objectives: A Potential Dichotomy: • Whilst the endeavor to bolster investor safeguards is undoubtedly laudable, the proposal’s trajectory might inadvertently be antithetical to this very ethos. • The audacious recalibration of the custodial edifice, bereft of a cogent policy underpinning, could inadvertently disenfranchise a myriad of investors. 5. CFTC Entities: A Potential Overreach: • The latent implications of the rule might inadvertently infringe upon entities under CFTC’s aegis, thereby precipitating volatility in the derivatives and commodities sectors. • The conspicuous absence of synergistic endeavors with the CFTC raises pertinent questions about the holistic efficacy of this endeavor. 6. Implications for Derivatives Markets & Advisory Patrons: • Pertinent entities pivotal to the derivatives milieu might grapple with unforeseen impediments. • The new regulations could inadvertently constrict advisory clients’ operational bandwidth, overlooking a rich tapestry of precedents set by both domestic and global market regulators. Given the nuanced complexities outlined herein, I passionately beseech a thorough reevaluation of this proposal. The intrinsic robustness of the CFTC’s framework has been an anchor for our dynamic markets. Any inchoate legislation that potentially jeopardizes this equilibrium warrants meticulous scrutiny. In closing, I’d advocate for an exhaustive economic introspection in any future legislative endeavors, predicated upon tangible gaps in the extant custody paradigm and conceived in concert with pertinent regulatory custodians. Your thoughtful consideration is deeply appreciated. I remain at your service for any collaborative discourse that seeks a harmonized regulatory topography. Thank you for your time