Tag Archives: mutual fund derivatives

Mutual Fund Corner: SEC Extends No-Action Relief from Section 17(f) Custody Requirements for Margin on Certain Cleared Swaps

On December 26, 2013, the Securities and Exchange Commission’s Division of Investment Management (“IM”) issued No-Action Letters to the Chicago Mercantile Exchange, ICE Clear Credit and LCH Clearnet.  The letters can be accessed by clicking here and looking for the letters under the “Chronological List of No Action Letters”. In effect, these no-action letters extended relief … Continue Reading

What constitutes custody of an OTC derivative under the Investment Company Act of 1940 and Investment Advisers Act of 1940?

Attached is a comment letter (available here)  that Steve Keen and I recently submitted to the SEC on the topic of the custody of OTC derivatives by registered investment companies and their advisers.  In the letter, we identify an issue – what constitutes custody of an over-the-counter derivative by a registered investment adviser (Rule 206(4)-2 of the Advisers … Continue Reading

Mutual Fund Corner: SEC’s Derivatives Concept Release – Practical Considerations for 1940 Act Counsel

OVERVIEW & THE PURPOSE OF THIS POSTING On August 31st, the Securities and Exchange Commission approved the issuance of a concept release (SEC Release No. IC-29776) entitled, the "Use of Derivatives by Investment Companies Under the Investment Company Act of 1940" (available here). According to the SEC, the release is part of a larger project … Continue Reading

Article from Securities Technology Monitor: Segregation of Swap Collateral Posted to Swap Dealer FCM by Customers

Chris Kentouris of Securities Technology Monitor recently authored an article entitled, "" available here. The article will provide you with a good, high-level summary of the status of the development of certain key issues in the OTC clearing discussion in the U.S.: 1) The mechanics of customer collateral segregation by a futures commission merchant / clearinghouse in … Continue Reading

Mutual Fund Corner: The SEC Concept Release On Derivatives

Can be found here. We are reading it now, so more to come soon… In the meantime, here is the SEC’s summary of what is in that release. The Securities and Exchange Commission (the "Commission") and its staff are reviewing the use of derivatives by management investment companies registered under the Investment Company Act of … Continue Reading

Mutual Fund Corner: On August 31st, SEC to Consider Whether to Issue a Concept Release On The Use of Derivatives By Mutual Funds

In an August 24th Sunshine Act Notice (available here), the SEC announced that it hold a pubic meeting on August 31st to consider, among other things,…drumroll please... whether to issue a concept release and request public comment on a wide range of issues under the Investment Company Act raised by the use of derivatives by … Continue Reading

Mutual Fund Corner: July 16th and 17f-6 No Action Letters

In an earlier posting – available here, we reported that the SEC issued several No Action Letters that have the combined effect of permitting registered investment companies to posting initial margin on cleared swaps directly with their clearing member. By their terms, the no-action relief provided by these letters expires on July 16, 2011. Q1:Why? … Continue Reading

Mutual Fund Corner: SEC Issues CME a Rule 17f-6 Letter for OTC Cleared Interest Rate Swaps

On March 24th, the SEC’s Division of Investment Management issued a no-action letter under Rule 17f-6 to the CME that will allow mutual funds to post collateral in respect of OTC centrally cleared interest rate swaps directly with their futures commission merchants. The letter provides temporary relief until July 16th, which is the date on which … Continue Reading

SEC No-Action Letter Update: Mutual Funds Can Post Margin on Centrally Cleared Interest Rate Swaps

In a March 16th No-Action Letter, LCH.Clearnet Limited ("LCH") received a no-action letter from the SEC’s Division of Investment Management ("IM Division") that, in effect, permits a mutual fund to "place and maintain assets in the custody of" LCH or a clearing member of LCH (the "Clearing Member") for purposes of meeting margin requirements for interest … Continue Reading

Attention Hedge Funds, Mutual Funds and Investment Advisers: Comment Period Open for CFTC Rules 4.5, 4.13 and 4.14

The Notice of Proposed Rulemaking has been published in the Federal Register (available here)  in respect of the proposed changes to CFTC Rules 4.5, 4.13 and 4.14 (i.e., fund and adviser exemptions from CPO and CTA registration). The comment period is open until April 12th. Thoughts will be forthcoming soon… Good day. Good writing. TSR… Continue Reading

Attention Funds and Advisers: CFTC issues NOPR for Rule 4.5, 4.13 and 4.14, et. al.

Just last night, I sat back and said to myself, "I wish that the CFTC would issue another 140+ page NOPR." Well, today they posted the NOPR in respect of CFTC Rules 4.5, 4.13, and 4.14. It has not yet been published in the Federal Register, so the comment period is not yet open. And, TSR … Continue Reading

Op Ed: January 26th – A Microcosm of U.S. Derivatives Regulatory Reform

Two different events occurred on January 26th that we believe represent a microcosm of the entire U.S. derivatives regulatory reform process to date. EVENT #1: THE JANUARY 26TH PROPOSAL The 11th open meeting on Dodd-Frank derivatives market regulatory reforms was scheduled to be held by the CFTC. While the agenda included issues related to the … Continue Reading

Attention Private Hedge Funds, Registered Investment Companies and Registered Investment Advisers – The CFTC and SEC Have Proposed Rules That Will Affect You

Links to Relevant Documents; Overview of Relevance A joint SEC/CFTC Rule Proposal for Reporting on Form PF by Investment Advisers,  Commodity Trading Advisors, and Commodity Pool Operators to Private Funds available here   A Press Release and a Fact Sheet for new CFTC rule proposals that will effect mutual funds (registered investment companies), hedge funds, registered investment advisers, commodity … Continue Reading

PART 12: “ERISA Plans” “Registered Investment Companies” “Affiliated Positions” “Investment Advisory Clients” “Inter-Affiliate Swaps” and “Legacy Portfolios” and Major Swap Participant Under the December 7th Joint SEC / CFTC Rule Proposal

This is the 12th AND FINAL posting of a 12-part series on a December 7th rule proposal (75 Fed Reg 80174) by the SEC and CFTC (the "Regulators") to further define several key terms in Title VII of Dodd-Frank: swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, and eligible contract participant. In this posting, … Continue Reading