The Chair of the Securities and Exchange Commission offered a sneak peak of upcoming regulations. Mary Jo White was speaking at the 75th Anniversary Celebration: Investment Company and Investment Advisers Acts and offered a few tidbits.
Chair White spoke about the history of the Acts and offered a glimpse into the future:
Today, as many of you know, the Commission has an ambitious agenda to address evolving risks for funds and advisers, recently proposing enhanced data reporting by investment companies and advisers, and, just last week, proposing to require open-end funds to enhance funds’ liquidity risk management. As we speak, Commission staff is also developing recommendations that I hope to advance for the Commission’s consideration by the end of this year related to the use of derivatives by funds, including measures to appropriately limit the leverage these instruments may create, as well as enhancing risk management programs for such activities.
Beyond that, the staff is developing recommendations regarding transition planning for advisers, annual stress testing by large investment advisers and funds, a program of third party examinations for investment advisers and a uniform fiduciary duty for investment advisers and broker-dealers.
Talk about a full plate of critical initiatives.
The SEC wants to limit the use of derivatives by funds. It’s not clear whether that would applicable to all funds or focused on mutual funds.
Transition planning for advisers is a hot button. It’s certainly an issue for small retail advisers. It’s also a question for many private fund managers. It will be interesting to see what the SEC will propose.
Annual stress testing for large funds will be tricky. I wonder how the SEC will define “large.”
Third-party exams for investment advisers is back on the table. That will mean more costs to registered advisers having to pay for the service of being examined more regularly. I’m sure FINRA popped its head up when it saw that line in the speech.
Sources:
- Opening Remarks at the 75th Anniversary of the Investment Company Act and Investment Advisers Act“The Investment Company Act and Investment Advisers Act Standing the Test of Time” Speech by Chair Mary Jo White
- SEC’s White hints at future PE regulation by Nicholas Donato in Private Funds Management
Fortune Telling
by Russ Allison Loar
CC BY SA
