Congressman Troy Downing’s bill, H.R. 3959, known as the Protecting Private Job Creators Act, has advanced in the legislative process after being reported favorably by the House Financial Services Committee with a bipartisan vote of 41-11.
The legislation seeks to exempt fixed-income securities from Securities and Exchange Commission (SEC) Rule 15c2-11. Supporters argue that this change would help protect American jobs and bring greater regulatory clarity to the U.S. fixed income market.
“Securities regulation must be fit for purpose or risk harming the very markets it is meant to protect,” said Congressman Downing. “The SEC’s rule 15c2-11 is one such case where a misinterpretation of financial regulation has left the market for fixed-income securities worse off, threatening reduced liquidity and harm to private capital formation. I’m proud of the bipartisan support this legislation received today and look forward to getting it across the finish line.”
Rule 15c2-11 was originally adopted by the SEC to prevent fraud in over-the-counter (OTC) markets. However, in 2021, SEC staff indicated plans to begin enforcing this rule in fixed-income markets—a departure from five decades of previous regulatory practice. This shift raised concerns among market participants that dealers might limit offerings of various fixed income securities, potentially impacting investors’ access.
A study conducted in 2022 projected that applying Rule 15c2-11 to fixed-income securities could lead to significant job losses: an estimated reduction of 30,000 jobs annually over five years, then 50,000 fewer jobs each year for another five years, followed by a loss of 100,000 jobs annually thereafter. The same analysis suggested that these changes could decrease U.S. GDP by $100 billion over ten years.
Although enforcement actions related to the SEC’s 2021 no-action letter have been paused, there remains uncertainty regarding future regulatory direction on this issue.
The Protecting Private Job Creators Act has garnered support from several industry groups including the Securities Industry and Financial Markets Association (SIFMA), National Association of Manufacturers, American Securities Association, Investment Adviser Association, CRE Finance Council, US Chamber of Commerce, Loan Syndications and Trading Association, Structured Finance Association, Bond Dealers of America, Investment Company Institute, and Managed Funds Association.
