The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

US SEC Adds More Data Requirements to its Proposed Hedge Funds Rules

Share article

The US Securities and Exchange Commission (SEC) has added a further set of data disclosure requirements to those it is proposing for the hedge funds market as part of the Dodd-Frank reforms. Under the proposed reforms, more organisational and operational information will be needed for SEC registration purposes from investment advisers and the private funds they manage in order to better judge counterparty risk in the traditionally opaque hedge funds sector.

The basic organisational and operational information includes the amount of assets held by the fund, the types of investors in the fund, and the adviser’s services to the fund. The rules also provide for the identification of five categories of “gatekeepers” that perform critical roles for advisers and the private funds they manage: auditors, prime brokers, custodians, administrators and marketers.

The rule changes, which are part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, permit the SEC to require hedge funds to register with the regulatory body by closing the current loophole under the Investment Company Act of 1940. SEC chairman Mary Schapiro explains: “The enhanced information envisioned by these proposed rules would better enable both regulators and the investing public to assess the risk profile of an investment adviser and its private funds.”

These new classifications and reference data items must therefore be maintained by investment advisers and reported to the regulator in the formats requested, should the rule changes be approved. The rules also include more details about who is exempt from providing these reports, such as venture capital funds.

The SEC is seeking public comment on the proposed rules for a period of 45 days following their publication in the Federal Register. See the SEC website here for more details.

Europe is also seeking to impose new transparency requirements on the hedge fund sector, although the requirements on this side of the pond are not as detailed.

As for identification of individual hedge funds themselves, Cusip Global Services (CGS) has said that it is planning the launch of its Cusip for hedge funds service for the fourth quarter of this year. CGS signed up to work in partnership with hedge fund and fund of hedge fund information provider HedgeFund.net to produce a Cusip identification system for hedge funds and funds of hedge funds on a global basis in June 2009 and has since added around 4,000 hedge fund identifiers to its database.

Related content

WEBINAR

Recorded Webinar: The Benefits of Advancing Client Data Management Capabilities

Managing client information is not a new challenge for financial institutions, and it is a challenge that continues to evolve. Bringing together different silos of client information into a single, holistic and hierarchical view to understand client risk and meet KYC and AML obligations is a common issue for financial institutions. Traditionally, client information is stored...

BLOG

Creator of SOTERIA Branches Out with New Agnostic Audio Assurance Offering, as Regulatory Focus Sharpens

Insightful Technology, the RegTech specialist most recently known for creating Communication compliance and surveillance SaaS solution, SOTERIA, has spread its wings today with the launch of the first agnostic stand-alone product outside of the core offering. Audio Assure, a solution that enables automated and accurate audio testing, as well as the monitoring of line operations...

EVENT

TradingTech Summit London

The TradingTech Summit in London brings together European senior-level decision makers in trading technology, electronic execution and trading architecture to discuss how firms can use high performance technologies to optimise trading in the new regulatory environment.

GUIDE

Regulatory Data Handbook 2020/2021 – Eighth Edition

This eighth edition of A-Team Group’s Regulatory Data Handbook is a ‘must-have’ for capital markets participants during this period of unprecedented change. Available free of charge, it profiles every regulation that impacts capital markets data management practices giving you: A detailed overview of each regulation with key dates, data and data management implications, links to...