Regulatory Outlook | 07.21.21
All’s Quiet on the Reg BI Front
Regulation Best Interest (Reg BI) went into force last June, but after more than a year of operating under the standard, uncertainty remains regarding to what extent brokerages have changed their advice practices. “Reg BI urgently needs to offer real guidance to address material issues which remain unclear or undefined,” said Knut Rostad, president of the Institute for the Fiduciary Standard. “Start with 'best interest' or 'mitigation.' If Reg BI is to be credible, this should not be a several-year process.” The SEC could take a page out of its ESG playbook to shape Reg BI, Rostad said. For instance, among the agency's priorities are defining what ESG means and developing metrics for measuring ESG factors. "Apply the same principle to Reg BI, and we are halfway there," said Rostad.
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