This month the SEC Chair announce three initiatives proposed to address the risks of complex issues in the asset management industry. The broad initiatives include:

  • Enhanced data reporting – This would require standardized reporting for derivatives used by funds and securities lending.
  • Controls on risks in portfolio composition – This is aimed at risks related to liquidity and derivatives and may include updating liquidity standards, disclosure requirements of liquidity risks, or limits on leverage in derivative use.
  • Transition planning and stress testing – This would require large asset managers to adopt living wills/transition plans to protect clients in the event of a disruption in the adviser’s operations in addition to complying with stress testing implemented in the Dodd-Frank Act.

See Jay G. Baris, “SEC to Require Living Wills and Stress-Testing for Investment Advisers,” JDSupra Business Advisor (December 15, 2014).

Posted by Ryan Moore, Associate Editor, Wealth Strategies Journal