The Office of the Investor Advocate at the U.S. Securities and Exchange Commission (SEC) announced on Thursday that it will launch a new investor research project that aims to provide the regulator’s rulemaking process with feedback about the effects of regulatory policy on investors from surveys and specific testing efforts.
For example, the project will specifically examine the effectiveness of retail disclosure, in an effort to identify and test measures designed to increase investor awareness of key investment features.
The initiative, “has the potential to make a significant contribution to evidence-based policymaking at the commission, says Rick Fleming, SEC investor advocate, in a statement.
“With this new tool, we can gain better insights into the potential benefits to investors from proposed rule changes, and we will be able to help identify the best options amongst competing policy choices,” he adds.
The research initiative, which is known as Policy Oriented Stakeholder and Investor Testing for Innovative and Effective Regulation (POSITIER), will formally launch at a summit being hosted by the SEC at its Washington, D.C. headquarters on March 10.
That event will also feature a discussion of strategies for improving retail investors’ understanding of key investment characteristics, such as fees, risks, returns, and conflicts of interest; along with presentations from academics in various fields, including household and behavioral finance, psychology, marketing, and law.
“Although the focus will be on disclosure in the context of investment funds, the insights on improving the cognitive salience of information will be relevant to other financial disclosure contexts,” the SEC says in a statement.