Global financial regulators continue to push to dampen risk in the system and to improve their readiness to respond to the next crisis. After an initial focus on banks and insurance companies, that regulatory attention has been shifting to other sectors. Now certain regulators, notably the Financial Stability Board along with the International Organization of Securities Commissions, appear to be actively considering whether to expand “too big to fail” designations and accompanying oversight and restrictions to asset managers and investment funds. Against that backdrop, and perhaps to show that action by other regulators in this space is unnecessary, the U.S. Securities and Exchange Commission proposes to dramatically expand reporting – both public and non-public – of portfolio and other data by U.S. registered investment companies.
The proposed new requirements are numbingly detailed, but can be distilled to the following: There would be expansive monthly portfolio and risk reporting; more derivatives disclosures in fund financial statements; and a new annual “census-style” reporting form that would replace an obsolete existing SEC form. As a modest sweetener, the agency also proposes to permit posting shareholder reports to a website instead of mailing them under certain circumstances. This alert summarizes each of the proposals. A companion alert covers new reports proposed at the same time for investment advisers that file Form ADV with the SEC.