Techniques of Regulatory Implementation: The Case of Reg BI and Form CRS

Abstract

This chapter argues that the implementation of Regulation Best Interest (“Reg BI”) and its accompanying Form Client Relationship Summary (“Form CRS”) is a good case study of optimal interaction between securities regulators and compliance officers in the implementation stage of the regulations. It contends that a well-established account of regulation, which is known as “new governance” and which views regulators as working closely with regulated firms to have a more tailored implementation of regulations, explains well the interaction between securities regulators and compliance officers in the rollout of Reg BI and Form CRS. It summarizes the background to, and provides an account of the substance of, Reg BI and the related Form CRS, emphasizing that these reforms impose compliance obligations on broker-dealers, which make them ideal for a case study looking at the collaboration between the regulators and compliance officers in that implementation. It looks in detail at the interaction between the regulators and compliance officers once Reg BI and Form CRS were finalized and the implementation process began. It concludes by offering lessons that may be drawn from this study as to useful methods of interaction between securities regulators and compliance officers in the implementation stage of a regulation.

Keywords: Regulation Best Interest, compliance, broker-dealers

JEL Classification: K22