SEC's Proposed Reporting Requirements
The U.S. Securities and Exchange Commission recently proposed rules under the Investment Company Act of 1940 and related regulations that would require certain funds, including Exchange-Traded Funds, to provide additional information to the SEC relating to, among other things, certain types of investments, liquidity, pricing, and risk metrics. This additional information will assist the SEC with assessing potential risks to investors and allow investors to better understand their exposure and risk factors. The proposal requires that the information be reported in a structured data format that allows the SEC and the public to better review and analyze the information. Standardized disclosures in financial statements would also be required, and shareholder reports would be available via a website. As the SEC Chair explained, "These recommendations will vastly improve the type and format of the information that funds provide to the Commission and to investors…Investors will have better quality and greater access to information about their fund investments and investment advisers, and the SEC will have more and better information to monitor risks in the asset management industry." The changes do not come without a cost though. One goal of the proposed rules is funds would provide the required information to the SEC on a more frequent basis and in a form that allows the SEC to better analyze the information. Accordingly, the proposal calls for monthly reporting, which will likely increase the funds' costs significantly given the amount of information required to be provided.
Posted in: SEC
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