Regulation sets the boundary institutions must operate within. Incentives decide where, inside that boundary, institutions actually choose to go — and the two are easy to conflate.
Two funds facing an identical capital or disclosure requirement can respond in opposite ways depending on what they're optimised to protect: market share, short-term performance numbers, member retention, or long-term member outcomes. The regulation is the same; the response isn't. That's usually a signal about incentive structure, not about the regulation's clarity.
For an investment committee, the practical takeaway is to read new regulation with a second question attached: not just "are we compliant," but "what does this quietly make more attractive for us to do, and is that actually the outcome we want."