SEC Announces New Division of Risk, Strategy, and Financial Innovation


The Securities and Exchange Commission announced the creation of its new Division of Risk, Strategy, and Financial Innovation. University of Texas School of Law Professor Henry T. C. Hu will be its first Director. Professor Hu authored several articles that brought attention to potentially manipulative market practices using borrowed stock and derivatives.

“The new division combines the Office of Economic Analysis, the Office of Risk Assessment, and other functions to provide the Commission with sophisticated analysis that integrates economic, financial, and legal disciplines. The division’s responsibilities cover three broad areas: risk and economic analysis; strategic research; and financial innovation.”

But what is this new division going to be doing?

The new division will perform all of the functions previously performed by Office of Economic Analysis and Office of Risk Assessment, along with the following:

  1. strategic and long-term analysis
  2. identifying new developments and trends in financial markets and systemic risk
  3. making recommendations as to how these new developments and trends affect the Commission’s regulatory activities
  4. conducting research and analysis in furtherance and support of the functions of the Commission and its divisions and offices
  5. providing training on new developments and trends and other matters.

The SEC now has five divisions:

  • Division of Corporation Finance
  • Division of Enforcement
  • Division of Investment Management
  • Division of Trading and Markets
  • Division of Risk, Strategy, and Financial Innovation

According to Broc Romaneck, this is the first new division at the SEC since 1971. They divided Trading and Markets into Division of Enforcement and a Division of Market Regulation, and created a new Division of Investment Company Regulation, spun off from the Division of Corporate Regulation.