SEC to Tighten Rules for Mutual Funds

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SEC to Tighten Rules for Mutual Funds

New SEC regulations for mutual funds
The asset management industry is the next industry that may face tighter regulations from the SEC. This will include mutual funds, hedge funds and private equity funds.

These new rules proposed by the SEC would require funds to offer more information about their holdings. Funds would also be subject to stress tests.

Inside the Proposed Changes

According to the Wall Street Journal, the new regulations would be similar to the changes made in the banking industry after the 2008 collapse.

The changes were triggered by the practice of highly controversial alternative mutual funds. Alternative mutual funds often use derivatives to boost profitability.

These funds have been popular among clients, but could soon be limited. The SEC plans on limiting the amount of derivatives that can be sold by asset managers to small investors. There would also be limitations put on alternative mutual funds and leveraged ETFs.

In addition, funds would be required to submit documentation to the SEC regarding the data on their holdings.

The SEC also plans to require these funds to outline how their businesses could be sold in the case that it was forced to dissolve.

Mutual Funds Most Affected

The new SEC regulations would have the largest effect on the firms mentioned above. However, if the new rules are approved, it would have an effect on all funds. The proposed changes have been criticized by Fidelity as the firm claims the current business practices present little risk for the financial industry.

The Bottom Line

The changes proposed by the SEC are still in the beginning stages of being approved, but it is something that mutual fund investors should keep a close eye on. Investors who currently utilize alternative mutual funds may soon face limitations.

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Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Why 30 trillion is invested in mutual funds book

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Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.


Read Next

New SEC regulations for mutual funds

SEC to Tighten Rules for Mutual Funds

The asset management industry is the next industry that may face tighter regulations from the SEC. This will include mutual funds, hedge funds and private equity funds.

These new rules proposed by the SEC would require funds to offer more information about their holdings. Funds would also be subject to stress tests.

Inside the Proposed Changes

According to the Wall Street Journal, the new regulations would be similar to the changes made in the banking industry after the 2008 collapse.

The changes were triggered by the practice of highly controversial alternative mutual funds. Alternative mutual funds often use derivatives to boost profitability.

These funds have been popular among clients, but could soon be limited. The SEC plans on limiting the amount of derivatives that can be sold by asset managers to small investors. There would also be limitations put on alternative mutual funds and leveraged ETFs.

In addition, funds would be required to submit documentation to the SEC regarding the data on their holdings.

The SEC also plans to require these funds to outline how their businesses could be sold in the case that it was forced to dissolve.

Mutual Funds Most Affected

The new SEC regulations would have the largest effect on the firms mentioned above. However, if the new rules are approved, it would have an effect on all funds. The proposed changes have been criticized by Fidelity as the firm claims the current business practices present little risk for the financial industry.

The Bottom Line

The changes proposed by the SEC are still in the beginning stages of being approved, but it is something that mutual fund investors should keep a close eye on. Investors who currently utilize alternative mutual funds may soon face limitations.

Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Popular Articles

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.


Read Next