What's going on?

The Chair of the SEC (the US government department charged with regulating financial services) announced she will step down from her post before Donald Trump assumes the presidency. The vacancy allows Trump to appoint someone who will prioritize his aims, which many investors think will involve less regulation for big banks.

What does this mean?

Mary Jo White, the outgoing SEC Chair, is credited with some enforcement successes but her tenure was largely inhibited by political factors (you can read more here). With White�s resignation, attention is now focused on what Trump�s appointment will tell us about his aims for financial regulation. With two empty deputy roles (technically called �commissioners�) that also need to be filled, the scope for a new direction at the SEC is significant.

Why should I care?

For markets: Banks� investors are celebrating the prospect of less regulation.
In the aftermath of the 2008 financial crisis, laws were passed aimed at limiting banks� activities and reducing their risks to the overall economy. But since Trump�s election, stocks of big US banks are up, on average, almost 15%. Investors appear to be very optimistic that a Trump administration will roll back some of the laws and, perhaps, be less inclined to fine banks big bucks (as has been the case under Obama).


For you personally: Trump�s presidency is imperiling a new rule that would force financial brokers to act in your best interest.
In the US, financial advisors are legally required to give advice that is in the best interest of their client; however, financial brokers are subject to a lesser standard. A directive from President Obama sought to change that, but the industry is optimistic that Trump won�t follow through with plans to implement it. The result would likely be good for banks with brokerage businesses, but some argue that it would work against the interests of everyday investors.