Bill Overview
Title: TICKER Act
Description: This bill requires the identification of consolidated variable interest entities on securities exchanges. Specifically, the symbol used on the exchange must identify these entities as consolidated variable interest entities. (A consolidated variable interest entity is a business structure where an investor holds a controlling interest in an entity through contractual agreements rather than having a majority of voting rights.) In addition, the Securities and Exchange Commission must require brokers and dealers to warn investors in these entities that those investors may lack legal recourse with respect to these investments.
Sponsors: Sen. Scott, Rick [R-FL]
Target Audience
Population: Investors in consolidated variable interest entities
Estimated Size: 7000000
- The bill mandates changes on securities exchanges and affects investors involved in such securities.
- Consolidated variable interest entities are key targets as they represent complex investment structures that may pose risk to uninformed investors.
- Investors in these entities will receive additional information, which could influence their investment behavior.
- The bill affects brokers and dealers who will have new requirements to disclose risks to investors.
- Globally, anyone investing in U.S. markets or in entities based there might be impacted.
Reasoning
- The policy is intended to affect investors dealing with complex and often risky investment structures known as consolidated variable interest entities. These individuals are the primary focus of the TICKER Act.
- The policy's goal is to increase transparency and awareness among investors about the risk associated with such investment structures.
- Participants include a range of investors from individual retail investors to representatives of institutional investors, as well as brokers and dealers who would have to adapt to new disclosure requirements.
- The budget constraint implies a limited scope of direct interventions but a significant potential impact through regulatory change targeted at large-scale financial entities.
- Distribution of investors ranges widely in demographics though a substantial portion is likely middle-aged since they are key participants in investment activities.
Simulated Interviews
Financial Analyst (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- I think more transparency is always good, but this could lead to overreaction among less informed investors.
- It might impact liquidity and volatility for these types of investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Software Engineer (San Francisco, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- Seems like a smart move for novice investors who aren't aware of the pitfalls.
- I personally prefer making informed decisions, so more data is helpful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Retired (Chicago, IL)
Age: 52 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 3/20
Statement of Opinion:
- I'm concerned about perceived risks affecting my current income strategy.
- This policy is worth it if it truly reduces investment risk.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 8 |
Brokers Manager (Dallas, TX)
Age: 40 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- It will complicate operations at first, but is ultimately beneficial if it prevents bad investments.
- I'm worried it will initially result in reduced trades as people reassess risks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Small Business Owner (Miami, FL)
Age: 61 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 4/20
Statement of Opinion:
- With such warnings, I might diversify more cautiously and not just look at high-yield returns.
- It's good that they enforce these rules, but execution matters.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Graduate Student (Boston, MA)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 2/20
Statement of Opinion:
- For my student projects, more data from the market is always better.
- This may not directly affect me yet, but good preparation for future markets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 8 |
Investor Relations Advisor (Seattle, WA)
Age: 67 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 6.0 years
Commonness: 5/20
Statement of Opinion:
- Clients want trustworthy advice; this policy supports more reliable data.
- I'll need to adjust some guidance strategies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 8 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Tech Entrepreneur (Austin, TX)
Age: 37 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- This policy might deter some from investments purely based on misunderstanding risk.
- I support policies improving clarity though execution matters.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Public High School Teacher (Philadelphia, PA)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 6/20
Statement of Opinion:
- I mostly trust my financial advisor to handle these things, but knowing more is reassuring.
- I want safe returns post-retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Accountant (Los Angeles, CA)
Age: 57 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Disclosure helps mitigate bad decisions but shouldn't deter risk-takers outright.
- The markets are better with informed investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $15000000 (Low: $12000000, High: $18000000)
Year 2: $9000000 (Low: $7000000, High: $12000000)
Year 3: $9000000 (Low: $7000000, High: $12000000)
Year 5: $9000000 (Low: $7000000, High: $12000000)
Year 10: $9000000 (Low: $7000000, High: $12000000)
Year 100: $9000000 (Low: $7000000, High: $12000000)
Key Considerations
- The implementation cost for the SEC and compliance costs for brokers/dealers.
- The potential change in investor behavior due to increased transparency and awareness of risks.
- Future adjustments might be necessary as market responses to the new information become clearer.