On July 7, the SEC released its latest Regulatory Flexibility Agenda, providing an early look at SEC Chair Paul Atkins’ rulemaking priorities for the coming year. Although the agenda does not create new legal obligations or modify existing regulations, Salus GRC believes that it offers valuable insight into the Commission’s regulatory direction. For SEC-registered investment advisers, the agenda signals a shift toward modernizing existing rules, reducing certain compliance burdens, and reassessing several initiatives that directly affect private fund operations.
One of the most significant developments is the SEC’s proposal, jointly issued with the Commodity Futures Trading Commission (CFTC), to substantially revise Form PF reporting thresholds. The proposal would increase the general filing threshold from $150 million to $1 billion in regulatory assets under management and raise the large hedge fund adviser reporting threshold from $1.5 billion to $10 billion. The agencies also propose eliminating or streamlining certain reporting requirements that have been viewed as costly and of limited supervisory value. If adopted, these changes could reduce reporting obligations for many mid-sized private fund advisers while allowing regulators to concentrate oversight on the industry’s largest participants.
The SEC also plans to revisit investment adviser recordkeeping requirements under Rule 204-2, particularly with respect to electronic communications. Following the Commission’s extensive off-channel communications enforcement initiative earlier this decade, advisers have devoted significant resources to expanding supervision and retention of electronic business communications. The agenda suggests the SEC is considering whether existing recordkeeping requirements appropriately reflect current technology and communication practices, potentially providing greater clarity regarding the types of electronic communications advisers are expected to retain.
Another key initiative is the Commission’s renewed effort to modernize the investment adviser custody framework. After withdrawing its 2023 Safeguarding Rule proposal, the SEC has begun developing a new custody rule that is expected to address traditional custody arrangements as well as the treatment of digital assets. Although details remain forthcoming, investment advisers should closely monitor this initiative, as custody requirements directly affect fund operations, qualified custodian relationships, examination procedures, and investor protections.
The SEC also identified potential amendments to the Pay-to-Play Rule (Rule 206(4)-5). The rule currently prohibits advisers from receiving compensation for advisory services to certain government entities for two years following specified political contributions by the adviser or its covered associates. The Commission is considering revisions that could modify contribution thresholds, narrow the definition of covered associates, and revisit aspects of the two-year compensation “time-out.” For private fund advisers managing public pension assets or pursuing government-related investors, any changes to the rule could have meaningful compliance implications.
While much of the agenda focuses on private fund advisers, the Commission also continues to evaluate broader market structure initiatives, including potential amendments to short-sale reporting under Rule 13f-2 and Form SHO and securities-lending reporting under Rule 10c-1a. Advisers employing short-selling strategies or participating in securities lending transactions should continue monitoring these developments as reporting obligations evolve. In August 2025, the United States Court of Appeals for the Fifth Circuit remanded the SEC’s previously adopted reporting obligations in these areas back to the Commission for further consideration.
Several additional agenda items, such as work on affiliated securities lending, finder regulation, proxy rules, and Rule 17a-7 cross-trades, may also affect certain advisers depending on their investment strategies and fund structures.
Although these initiatives remain subject to further SEC action, the agenda provides a useful roadmap of the Commission’s current priorities. Investment advisers should continue complying with existing regulatory requirements while monitoring future rule proposals, assessing how potential changes may affect compliance programs, operational processes, investor reporting, and technology infrastructure.