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Development of Enhanced Liquidity, Derivatives Regulations Underway

According to Bloomberg, the SEC is drafting new rules addressing “hard-to-sell assets” and the use of derivatives. The rules would also require a fund to have a plan in place to address the failure of the fund and would require stress testing of funds for large asset managers. In its recent Fiscal Year 2014 Agency Financial Report, the agency indicated that it would “consider significant enhancements to the risk management practices of investment funds and advisers, including through new requirements addressing liquidity risk management, stress testing, the use of derivatives, and transition planning.” According to the article, both the liquidity and derivatives rules appear to be slated for October 2015.