United States Capitol, Washington DC

State securities regulators are calling on policymakers to beef up conduct standards for retail investors, to carefully supervise fintech innovation, and to enhance access to investor redress.

The umbrella group of state and provincial securities regulators, the North American Securities Administrators Association (NASAA), issued its policy priorities for the coming year.

The group says conduct standards for brokers should be raised, and that both brokers and investment advisers should be required to act in their clients’ best interests. It also calls for fintech regulation that ensures investor interests are protected.

“Fintech holds the potential to improve and expand access to investment services and products. At the same time, the public’s interest in the benefits of innovation cannot supersede its risk or justify exempting innovators from the requirements of longstanding investor protection laws and regulations,” it says. Legislators should be cautious about the use of so-called “regulatory sandboxes” to enable industry experimentation, the group added.

NASAA also calls on U.S. legislators to ensure rigorous oversight of the emerging digital asset sector, including cryptocurrency and initial coin offerings (ICOs). “Congress should conduct rigorous oversight of fraud and investor exploitation regarding the sale of digital instruments,” it says.

Among other things, the group also recommends that the U.S. Securities and Exchange Commission (SEC) be given beefed up enforcement powers, and that investor access to restitution and dispute resolution should be enhanced. “Investor confidence in fair and equitable recourse is critical to the success of the securities markets and long-term participation in these markets by retail investors,” it says.