With the Trump administration taking office this Monday, capital markets are focusing on how his government appointments, including executive posts at the Securities and Exchange Commission (SEC) and the Federal Reserve, may impact bank regulations and the broader capital markets.
“With the new administration and its plans to pause much, if not all of the pending rule-making [there are almost 20 pending SEC Rule proposals], we expect a far different posture towards regulation and rule-making, which we would view as a positive,” said Kenneth E. Bentsen, Jr., President and CEO of SIFMA, during the annual media briefing on January 21.
“Among our key focus will be hopefully a more rational capital and liquidity framework that recognizes the dramatic changes that have occurred since the global financial crisis, in particular, also recognizing the important role that banks play in the capital markets, as well as looking at areas around equity market structure, the growth of private markets, the growth of retail investment base and product offerings to that base,” he said.
Isaac Wheeler, Managing Director, Balance Sheet Strategy at Derivative Path, said that in general, a Trump presidency is likely to mean “less regulation by enforcement and greater regulatory clarity for financial institutions.”
“In areas of innovation in particular, many depositories have found themselves operating under rules that weren’t particularly well-defined, disincentivizing the level of innovation they were able to engage in,” he said.
“There is an expectation that Trump’s regulators will offer clearer boundaries around what financial institutions are and aren’t allowed to do,” Wheeler told Traders Magazine.
On Tuesday, January 21, the SEC announced that President Donald J. Trump had designated Mark T. Uyeda as Acting Chairman of the agency.
The President has previously stated he will nominate former SEC Commissioner Paul Atkins to run the agency on a permanent basis.
According to Khody Azmoon, CEO and Co-Founder, and Head of Business Development and Product Strategy at BLOX Markets, under the current three-member commission, advancing a regulation requires all commissioners to participate in the vote unless one is recused or disqualified.
Therefore, some challenges may arise for the current three-member commission in adopting significant rules or amending existing ones, given SEC quorum rules, he said.
“This situation could result in some potential political maneuvering for Paul Atkins’s confirmation hearing for the permanent SEC Chair position, but we believe President Trump made an excellent choice in appointing SEC Commissioner Mark Uyeda as Acting Chair,” he said.
According to Azmoon, Mark Uyeda has prioritized promoting capital formation and innovation while protecting investors, particularly seniors, from fraudulent activities.
Additionally, his tenure with the SEC Staff, which began in 2006, reflects the experience and leadership qualities desirable in a permanent chair, he said.
It is also notable that Acting Chair Mark Uyeda was one of the SEC commissioners in September 2024 who unanimously voted 5-0 in favor of the equity market structure changes to Regulation NMS for Tick Sizes, Access Fees, and Better-Priced Order Transparency, he added.
“These changes are expected to enhance execution quality for the underlying retail investor by promoting tighter spreads, reducing exchange fees, and increasing fee transparency. Ultimately, we believe that Mark Uyeda as Acting Chair will be positive for the U.S. equities markets,” he said.
Benjamin Schiffrin, Director of Securities Policy, issued the following statement in connection with Better Markets’ new Fact Sheet, “Working-Class Americans Elected President Trump, and His New SEC Chair Must Take Action to Protect Them”.
“Last summer, at the Republican National Convention, Vice President-elect JD Vance said that his party was done ‘catering to Wall Street’ and would instead ‘commit to the working man.’ Yet the prevailing view is that the nomination of Paul Atkins to head the Securities and Exchange Commission will be a boon to Wall Street. That’s because Atkins has long advocated for deregulation, which often comes at the expense of the ordinary retail investor,” he said.
“So the question is whether, under President Trump, the SEC will favor Wall Street or the ‘working man’ and retail investors. Unsurprisingly, the messaging around Atkins’s nomination has not focused on his pro-Wall Street views. In nominating him, President Trump said that Atkins ‘is a proven leader for common-sense regulations,’” he said.
Meanwhile, the Federal Reserve Board announced on January 6 that Michael S. Barr will step down from his position as Federal Reserve Board Vice Chair for Supervision, effective February 28, 2025, or at such an earlier time as a successor is confirmed.
Wheeler commented: “Perhaps the most consequential appointment pending is that of the Fed chair, which could remain unannounced for some time.”
Barr was leading the U.S. initiative behind the Basel III endgame proposal, which aims to raise capital requirements for banks.
“If this selection aligns with Trump’s other regulatory appointments, markets may need to prepare for a shift in the Fed’s traditional reaction function,” Wheeler argued.
“The new Fed chair could mark a decisive change from the Bernanke-Yellen-Powell era’s mandate and drive greater interest rate volatility in the years ahead,” he said.
“Additionally, there is a general consensus that M&A activity will increase across the banking industry as a result of a more deal-friendly environment under the new administration,” he said.
