SEC Director of Investment Management Outlines Policy Initiatives

In testimony before the U.S. House Committee on Financial Services, SEC Division of Investment Management (the “Division”) Director Dalia Blass outlined the following underlying aims of the Division: (i) improve the retail investor experience; (ii) modernize the regulatory framework and engagement; and (iii) utilize resources efficiently. The Division is working on the following rule proposals or potential rulemaking areas:

  • propose Regulation Best Interest;
  • modernize fund disclosure both by reviewing the content of disclosures and by allowing funds to provide shareholder reports online;
  • improve disclosure as to variable annuities;
  • finalize a rule for the issuance of exchange-traded funds (“ETFs”), so that the SEC exemptive process can more efficiently process exemptive relief requests for ETFs not within the scope of the rule;
  • reduce obstacles to publishing research on investment funds in compliance with the Fair Access to Investment Research Act of 2017;
  • harmonize and improve registration and reporting requirements for business development companies and closed-end registered investment companies (“RICs”);
  • regulate the use of derivatives by RICs;
  • publish guidance regarding valuation procedures;
  • update investment adviser marketing rules;
  • improve investment company liquidity disclosures;
  • support fund innovation as to cryptocurrency-related holdings; and
  • review the proxy process.

Lofchie Comment: While the SEC talks the talk as to facilitating innovation, walking the walk is far more difficult. ETFs, for example, have become a significant product in the financial markets, and yet the SEC is only now considering a rule to routinize their issuance. As to cryptocurrency funds, one really has to question whether the SEC wants them to go forward, or is hoping that interest in the product is a bubble that will pop before the SEC is pushed to act. Compare SEC Rejects Another Nine Proposed Bitcoin ETFs with SEC Commissioner Peirce Calls on SEC to Embrace Innovation and Allow Cryptocurrency Risk-Taking.

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