SEC Proposes Revisions to Remove Credit Ratings from Regulation M, Broker-Dealer Net Capital Rule, Other Exchange Act Rules

The SEC has proposed amendments to remove references to credit ratings from Regulation M (the SEC’s anti-market manipulation rule, which currently doesn’t apply to investment grade non-convertible debt, preferred stock and asset-backed securities), the broker-dealer net capital rule (which currently permits broker-dealers to take a lower “haircut” on certain highly-rated securities they hold) and certain other SEC rules under the Securities Exchange Act. In place of the objective ratings criteria, the SEC generally proposes to require case-by-case determinations based on new criteria.