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SEC Chair: SEC Working to Finalize Liquidity and Derivatives Rules This Year

In a recent speech, SEC Chair Mary Jo White provided an update on the status of several recent Commission initiatives affecting the fund industry, focusing on the liquidity and derivatives proposals.  Chair White stated that those initiatives “will position the SEC to better monitor and protect America’s investors and the integrity of the industry.  And it is our responsibility to promptly finalize these rules, which I expect to move forward on this year.”  With respect to the derivatives proposal, she noted that a number of commenters had expressed concerns about the portfolio limitations and had provided a number of possible alternatives.  She encouraged the industry to continue to provide input on the proposal as the staff works to finalize the rule.

In addition to the Commission’s current proposals, Chair White stated that the Commission is “engaged in many other areas where important work remains to be done.  And that work is a shared responsibility for the Commission and for fund managers and boards.”  Specifically she described the staff’s disclosure effectiveness initiative that is currently exploring ways to “improve the form, content, and delivery of disclosures.”  Chair White also highlighted the staff’s review of the ETF industry.  She stated that the staff is reviewing how ETFs performed during the “Flash Crash” and last August to determine whether there are lessons learned that could be applied broadly to the regulation of these funds.

In addition, Chair White highlighted a number of other challenges facing the industry, including the risks of technology, the use of third party service providers, and portfolio pricing.  She closed by emphasizing the Commission’s role in protecting investors.  However, she noted that the industry also bears “weighty responsibility as stewards of the assets of America’s investors.”  She encouraged asset management executives to “foster a culture in your organizations that prioritizes responsibility and fairness and asks first – and last – what is in the best interest of investors.”