The investment landscape is changing at a rapid pace in the age of Trump 2.0. How can broker-dealers navigate the changing tides of deregulation to secure a better quality of service for users?
While regulation has long been framed as a matter of economic efficiency, there’s a lot of nuance when it comes to tightening and loosening oversight for financial players.
In the wake of the 2008 financial crash, we saw more consumer organizations, labor unions, and political figures advocating for a tightening of regulations. Now, with the arrival of a US President who remains squarely focused on driving growth by all means necessary, we appear to be heading for a dialled back regulatory outlook. But what does this mean for Wall Street?
The Age of Deregulation
In the early days of Donald Trump’s return to the White House, a series of executive orders were signed to transfer oversight of all US financial regulation, outside of monetary policy, while also setting a deregulatory agenda, to the Trump administration.
The initial order, entitled ‘Ensuring Accountability for All Agencies’, was signed on February 18, 2025, took aim at the lack of Presidential accountability that independent regulatory agencies took, while also noting that many of these agencies were capable of implementing regulations without review from the President.
The executive order hands supervision of regulatory agencies to the president, while also affords control of the entire executive branch with all executive departments and agencies, including the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Board of Governors of the Federal Reserve System, in connection with its conduct and authority related to supervision and regulation of financial institutions.
Crucially, the order highlights that proposed and final significant regulatory actions will now be subject to review by the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication in the Federal Register.
At a time when the federal workforce has already shrunk by 30,000 personnel due to the Department of Government Efficiency firings, it appears clear that Trump’s control over regulators is a tactical move to promote more growth within the United States.
Having already pledged before his inauguration that anyone investing at least $1 billion in the US will receive ‘fully expedited approvals and permits’, we can see that the President is increasingly looking to a more deregulatory environment, but what this new landscape looks like for broker-dealers is far from clear.
How will Deregulation Impact Broker-Dealers?
Because deregulation is geared towards reducing government restrictions on businesses in a bid to boost markets, these movements encourage institutions to become more self-regulating in order to improve efficiency across the board.
With this in mind, the government would generally intervene only when inefficiencies emerge as a result of malpractice or unforeseen circumstances.
This can help to increase investment opportunities by eliminating restrictions on new businesses to enter markets, helping to foster more competition and innovation in the process. This added competition can also help to drive lower prices for consumers.
With less need to spend resources on compliance in the regulatory landscape, broker-dealers, theoretically, are free to improve their products and services instead. This could lead to a stronger workforce, better marketing budgets, and a more effective incorporation of AI tools to improve the overall customer experience.
However, the reduction of oversight in the regulatory landscape can increase the risk of nefarious industry practices, poorer service quality, and security risks for consumers.
For instance, deregulation in the US airline industry in the 1970s saw a vast reduction in passenger fares and expanded consumer access to air travel in a similar way that the practice can help to lower costs in the investment landscape. However, without sufficient guardrails in place, we saw industry consolidation and concerns emerge over service quality in smaller markets.
These systemic risks show that unconstrained deregulation in the financial sector could have mixed results. In a landscape as complex as the financial services industry, government interventions into inefficiencies could be too late to avoid widespread damage and a run on banks through fearful investors.
Depending on how protected consumers are, more responsibility may fall on the shoulders of broker-dealers to navigate a landscape filled with risks and opportunities.
Prioritizing Compliance
While we’re yet to see the exact form that deregulation will take in the age of Trump 2.0, maintaining a business-as-usual approach can be an effective way to keep your users content with their experience.
With this in mind, continue to prioritize your compliance standards before regulatory changes take effect. It’s also worth maintaining your existing governance and risk management practices to carry on managing the expectations of your users.
Keep on the lookout for new developments from the government about fresh instances of deregulation and what it could mean for your business.
Preparing for Deregulation
Whether Trump’s emphasis on deregulation shakes up Wall Street for broker-dealers or steadies the financial sector ship, it’s important that you’re prepared for a period of upheaval.
By setting your broker-dealer firm up to be more adaptable to changes, you’re more likely to find success amid the uncertainty that lies ahead. When prepared for, deregulation can benefit the institutions that plan ahead, in making sure that you’re ready for the future, your firm can reap the benefits.
Read more:
How the Age of Deregulation is Set to Affect Broker-Dealers in the US