Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the intention to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the rule may have adverse effects on the competitiveness of US companies and our position in the global market. One potential negative impact is that the proposed rules may put US companies at a competitive disadvantage compared to their international counterparts. The expanded scope of the rule, particularly regarding the inclusion of a broader range of investments held in a client's account, may create additional compliance burdens for US investment advisers. This could hinder their ability to compete globally and attract investment capital. In an increasingly interconnected and competitive marketplace, it is crucial to maintain a level playing field for domestic firms. Furthermore, the application of the rule to crypto assets raises concerns. While it is important to address how investment advisers safeguard these assets, it is equally important to ensure that regulatory requirements do not stifle innovation in this emerging field. Striking the right balance between investor protection and fostering growth and innovation is imperative in the fast-paced world of digital assets. Another concern is the potential impact on the capital formation process. The proposed rule, with its requirements for enhanced investor protections and safeguards, may inadvertently increase compliance costs for qualified custodians. This could discourage certain custodians from offering their services, reduce competition, and ultimately limit the availability of custodial options for investment advisers. Easy and cost-effective access to custodial services is vital for the smooth functioning of investment markets, and any restrictions or barriers to entry could impede the efficiency of capital formation. It is important to note that the global investment landscape is highly competitive, with jurisdictions around the world vying for investment capital. If the proposed rule imposes excessive regulatory burdens on US investment advisers, it may result in capital flight and a loss of market share for US companies. It is crucial to consider the potential unintended consequences of these regulations on our ability to attract investments and remain globally competitive. In order to strike a careful balance between investor protection and promoting competitiveness, I kindly suggest the Securities and Exchange Commission conduct a thorough analysis of the potential impact of the proposed rule on the competitiveness of US companies. This analysis should take into account the potential limitations it may introduce, and explore alternative approaches that achieve the desired investor protections without hampering US companies. Thank you for considering my concerns. I strongly believe that it is essential to ensure safeguards for advisory client assets, while also maintaining a competitive environment that fosters economic growth and innovation. I look forward to the Securities and Exchange Commission's thoughtful consideration of these matters.