SEC members voted to propose limits on derivatives use by mutual
funds and ETFs in a bid to protect investors in funds that rely on
the high-risk transactions. The proposal is open for public comment
for 90 days, and could be formally adopted by the SEC sometime
after that. SEC Chair Mary Jo White said insufficient controls on
derivatives use can create "significant risks for funds
themselves and investors, as well as raise questions about the
potential impacts on the broader financial system." Under the
proposal, mutual funds and ETFs would also be required to adopt new
measures to control financial risks. They would choose one of two
ways to limit their use of derivatives: by limiting the amount of
derivatives transactions in the fund's portfolio to 150% of
total fund assets, or by allowing that amount to reach up to 300%
as long as the fund passed a test showing its portfolio is less
risky with derivatives transactions included than if it had none.
The SEC also voted
to propose rules that would require resource extraction issuers to
disclose payments made to the U.S. or foreign governments for the
commercial development of oil, natural gas or minerals, as mandated
under Dodd-Frank.
Link To Article
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
