@Ron Resnick , in your experience did you see instances where regulations were re-defined in practice (not modified in writing) by both parties after a little experience with implementation? What I've observed over time, is that when the pendulum swings there can be posturing, but the practical day-to-day implementation brings the pendulum nearer to equilibrium. In other words, practice can point out impracticalities with procedures as written. That doesn't mean everything stops.
No, I did not see this. Both the regulators and the regulated need to be clear about the "rules of the road." Everybody needs to be able to look at the same printed rule.
It would sow great confusion if some market participants had one, informally-modified understanding of the rules, and other market participants had a different understanding of the rules based on the actual text of the rules.
Regulated companies need to have comfort that the advice they are receiving from the regulators is in writing and can be referred to by both future regulators and by future employees at the regulated companies. It wouldn't work if over time regulations became modified by informal practice or by lore.
I agree with the equilibrium and pendulum swinging concepts. Sometimes regulators do go too far and in the course of practice and application of the rules they back off a little bit. But this typically would be effected and documented by "no action" letters, and not by informal, specialized understandings. "No action" letters are a great way for the regulator to communicate regulatory relief to all market participants simultaneously.
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