Joint Trades Letter on SEC Safeguarding Proposal 9 12 23 Final


September 12, 2023


We write to express our strong concerns regarding the U.S. Securities and Exchange Commission’s (the Commission) proposed rule, Safeguarding Advisory Client Assets (the Proposal). We support the Commission’s goal of ensuring high levels of investor protection, including the safety of client assets from potential misuse or loss. However, in its current form, the Proposal is in conflict with that goal as it will result in a myriad of negative impacts on investors including their access to various services, assets, and markets with well-established rules and procedures.

As such, we strongly urge the Commission not to adopt the Proposal in its current form. Further, we urge the Commission to gain a better understanding of the current custodial framework. Where the Commission can identify shortcomings that have failed to protect investors from loss or misappropriation of traditional assets, it should propose changes, based on a careful evaluation of the issues identified by commenters, that target any gaps in the current custodial framework while preserving that framework’s many strengths. If those changes represent a material change from the approach in the Proposal, the Commission should withdraw and re-propose the Proposal. Finalizing a new rule of which significant portions have been materially changed from the version as proposed would deny the public the opportunity to provide invaluable feedback on those changes and deprive the Commission of the benefits of any such feedback, consequences that would undermine the integrity and quality of our securities markets and the regulations that govern them.

Joint Trades Letter on SEC Safeguarding Proposal 9 12 23 Final