Commentary on public policy

Vanguard submitted a comment letter on the consultation report from the International Organization of Securities Commissions (IOSCO) regarding its revised recommendations for open-end fund liquidity risk management. The letter supports IOSCO’s view that open-end funds are a diverse class of products and not suited for a one-size-fits-all approach to liquidity risk management. We also offer specific suggestions for further clarifying IOSCO’s recommendations so that high-quality liquidity risk management practices are tailored to the behaviors and needs of each fund.

Vanguard submitted a comment letter on the consultation report from the International Organization of Securities Commissions (IOSCO) regarding digital engagement practices. The letter supports IOSCO’s efforts to propose good practices for using digital engagement practices that promote the interests of investors. We also suggest that IOSCO encourage regulatory guidance about the appropriate use of digital tools— that can evolve with the technology—and provide market intermediaries with clarity on the distinction between pro-investor technologies and those that don’t align with investor interests.

The Federal Deposit Insurance Corporation (FDIC) has proposed changes to its regulations under the Change in Bank Control Act (CBCA), specifically in response to areas where the CBCA affects the ownership of banking institutions by passive investment vehicles, such as index mutual funds and ETFs. In a recent comment letter sent to the FDIC regarding these proposed changes, Vanguard outlines its passive investment approach, including the steps it has taken to ensure passivity. Vanguard also offers several recommendations regarding the FDIC’s proposal, including one that the FDIC engage in a joint process with other government agencies that oversee the CBCA to ensure that federal banking regulators administer any changes to the law through a consistent and transparent process.

Vanguard has filed a comment letter in response to a notice of inquiry issued by the Federal Energy Regulatory Commission (FERC) regarding blanket authorizations for investment companies. The letter focuses on: (1) introducing Vanguard, our mission, and our commitment to passive investing; (2) communicating that Vanguard’s investment stewardship function is designed with passivity in mind; and (3) offering FERC a path forward should it feel changes to the authorization process are necessary.

The U.S. Department of Labor (DOL) has issued a proposed retirement security rule that would update the definition of an investment advice fiduciary. In response to this proposal, Vanguard submitted a comment letter that supports the proposal’s general goal to better protect retirement investors that use advice to make important financial decisions. But we also recommended that the DOL revise its proposal to clarify that education and personalized communications of general investment principles targeted to particular retirement investors are not considered recommendations that would trigger fiduciary status if these communications don’t make a specific call to action based on the individual needs of the investor.

Vanguard has submitted a comment letter responding to a Department of Labor (DOL) request for information on the implementation of several SECURE 2.0 provisions that address ERISA disclosures. The letter reiterates certain key positions that we shared with Congress during the legislative process, including our recommendation that the DOL not impose barriers to electronic delivery of plan communications beyond what is required by SECURE 2.0.

Vanguard has filed a comment letter in response to the Securities and Exchange Commission’s (SEC) proposal regarding conflicts of interest associated with the use of predictive data analytics by broker-dealers and investment advisors in investor interactions. Our comments emphasize the importance of prioritizing investor goals and interests in interactions with clients—not regulating technologies.

Vanguard submitted a comment letter on consultations from the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) regarding liquidity risk management tools in open-end funds. The letter commends FSB’s and IOSCO’s recognition that fund liquidity practices should be flexible and based on a variety of factors. We also offer several suggestions for improving this effort.

Vanguard submitted a comment letter to the Securities and Exchange Commission (SEC) on four rule proposals to change equity market structure. The letter provides feedback on key aspects of the proposals, specifically the disclosure of broker-dealer execution quality, quoting and trading increments, the exchange access fee cap, and the handling of retail orders. One of our key recommendations is for the SEC to prioritize enhanced disclosure of broker-dealer execution quality by adopting the Rule 605 proposal, which would provide retail investors with the ability to compare execution quality and costs more easily among brokers.

Vanguard submitted a comment letter on the Securities and Exchange Commission’s proposed rule on liquidity risk management and swing pricing. The letter expresses a number of concerns with the proposal, including the costs to investors of its swing pricing requirements and the replacement of the liquidity rule’s current flexibility with a one-size-fits-all, prescriptive approach for all funds.

The Financial Industry Regulatory Authority (FINRA) has issued a proposal for a remote inspections pilot program that would replace a temporary program established at the beginning of the pandemic. In our comment letter filed with the U.S. Securities and Exchange Commission (SEC), Vanguard expressed support for FINRA’s pilot program, which would give FINRA members the option to conduct required inspections remotely for up to three years. 

Vanguard has responded to the U.S. Department of the Treasury’s request for information on additional transparency in Treasury markets. In our comment letter, we advocate for transparency requirements that do not impair liquidity. We also call for strengthening reporting requirements for foreign banks and proprietary trading firms and for providing adequate safeguards to protect counterparty identities, holdings, and trading strategies.

Vanguard filed a comment letter in response to the Securities and Exchange Commission’s (SEC) rule proposal, The Enhancement and Standardization of Climate-Related Disclosures for Investors. Our letter generally supports the SEC’s proposal, which provides clear, consistent, and comparable foundational climate-related information, including uniform reporting of greenhouse gas (GHG) emissions generated directly by reporting companies (Scope 1) as well as those generated indirectly from purchased energy consumed by reporting companies (Scope 2). For other indirect GHG emissions generated in a reporting company’s value chain (Scope 3), we respectfully encourage the SEC to provide more targeted and flexible disclosures rather than the full Scope 3 framework proposed.

Vanguard filed a comment letter in response to the Security and Exchange Commission’s December 2021 proposed rule on money market fund reform. In general, we support the SEC’s proposed rule, particularly its provisions to eliminate liquidity fees and redemption gates and to increase daily and weekly liquidity requirements. We believe these provisions are critical to improving the resilience of money market funds in periods of market stress.

Vanguard expressed support for the SEC’s proposal to make funds’ proxy voting records more accessible to investors and made recommendations for expanding the proposal.

Learn why we believe the DOL proposal will benefit plan participants and beneficiaries by giving fiduciaries greater certainty that their investment and proxy voting decisions may consider other factors that are material to the risk-return analysis, including factors related to environmental, social, or governance considerations.

Vanguard recommends a combination of fund structural reforms and market structure reforms to ensure the long-term viability and stability of money market funds.

Vanguard believes that diversity, equity, and inclusion are essential to our success in serving our 30 million clients. We support a recent House bill that would make meaningful investments in historically Black colleges and universities (HBCUs). 

Vanguard urges the SEC to propose rules that will provide clear, concise, and meaningful climate-related disclosure that enables investors to make informed decisions based on consistent and comparable disclosures.

Vanguard supports bipartisan efforts in Congress to strengthen retirement security, including legislation introduced in the Senate that would expand automatic enrollment, raise the age for required minimum distributions to 75, and allow 403(b) plans to invest in collective investment trusts.

Vanguard recommends MMF reforms to the SEC, including a floating net asset value (NAV) for all prime MMFs, further consideration of stable NAV for tax-exempt MMFs with additional liquidity protections, and the elimination of fees and gates for all types of MMFs.

Learn why we support the Securing a Strong Retirement Act, a House bill that would allow for greater choice in investments, improve participant decision-making, increase the age for required minimum distributions, and simplify retirement plan administration.

Learn our views on the FTC’s proposal to modernize the federal premerger notification program, including our recommendations for making the FTC’s proposal less costly for investors. The premerger program provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur.

Vanguard weighs in on an FTC request for comment on whether the activities of mutual funds continue to meet the definition of “solely for the purpose of investment,” in light of investors’ increasing engagement on matters of corporate governance.

Vanguard supports the SEC’s proposal to modernize disclosure for open-end management investment companies by providing an engaging disclosure framework that gives investors timely access to key information. We also make several recommendations to further strengthen the proposal.

Vanguard urges the Department of Labor (DOL) to adopt a principles-based framework and ensure that securities voting practices for ERISA fiduciaries are implemented for the economic benefit of plan participants and beneficiaries.

Learn why Vanguard supports a CFTC proposal to provide an exemption from registration for certain foreign persons operating offshore commodity pools.

Vanguard supports a DOL proposal that ensures investors have access to advice that is always in their best interest and holds those who provide investment advice to a fiduciary standard.

Learn our views on a DOL proposal on selecting plan investments and why we believe that investors should have the choice to avoid investment risks, including those associated with environmental, social, and governance (ESG) considerations.

The Board of Trustees of the Vanguard Funds highlights four key areas of focus for clarifying how fund boards of directors and trustees can fulfill their statutory valuation responsibilities in light of market and other developments in the fund industry.

Vanguard supports the SEC’s approach to modernizing the framework for fund valuation practices, which among other things would permit fund advisors to determine fair value.

Vanguard saw opportunities to further strengthen customer protections in a proposal by the CFTC that would update the insolvency procedures for FCMs, while also distinguishing updated procedures for DCOs.

Vanguard supports a proposal by the CFTC regarding a real-time reporting framework for swaps and offers recommendations to strengthen the current SEF regulations in order to enhance transparency and price discovery within the swaps market.

Vanguard weighs in on whether the existing rule on fund names is effective in prohibiting funds from using names that are materially deceptive or misleading, and on whether the rule should apply to ESG-focused funds.

Vanguard supports IEX’s proposal to add a new order type, that would benefit investors by increasing liquidity among a more diverse group of market participants. We urge the SEC to approve the innovative proposal.

Vanguard supports an SEC proposal to provide more comprehensive regulation of funds’ use of derivatives and offers recommendations to further strengthen it.

Learn why Vanguard believes the practice of “post-trade name give-up” for cleared swap transactions exposes the positions of market participants and why we think eliminating the practice would enhance liquidity.

Vanguard makes a recommendation in response to the SEC’s proposal to update the procedural requirements that a shareholder must satisfy to include a proposal in a company’s proxy statement under Rule 14a-8. Our recommendation is intended to further align Rule 14a-8 with shareholder value.