Obama Plan Puts Hedge Fund Advisers Under SEC Umbrella
| Date Posted: June 17, 2009 |
Calls for 'Harmonization' of SEC, CFTC Rules on Similar Products
Hedge fund advisers would be regulated by the Securities and Exchange Commission under the Investment Advisers Act of 1940, according to the Obama Administration's proposed rewrite of financial regulations released June 17. The requirement, which would extend to private equity funds and venture capital funds, would include a "modest" but as yet unspecified threshold for assets under management.
The President's proposal also would establish a comprehensive structure for supervising all over-the-counter derivatives, including credit default swaps. Under the plan, the Commodities Exchange Act would be amended to authorize both the SEC and the CFTC to impose recordkeeping and reporting requirements on various types of derivative products. In addition, all standardized OTC derivatives transactions would be executed through regulated, transparent, central counterparties overseen by the Federal Reserve, according to the proposal.
While the administration abandoned any notion of combining the SEC and the CFTC, the administration gave the two agencies until Sept. 30 to come up with a plan to harmonize statutory and regulatory requirements for futures and securities. "While differences exist between securities and futures markets, many differences in regulation between the markets may no longer be justified," the plan states. The agencies must submit to Congress a list of all existing conflicts with respect to similar types of financial instruments and either justify or eliminate the differences.
While the President's plan would institute stronger capital requirements for all financial firms, it would subject the largest, "most interconnected and highly leveraged" firms to stricter prudential regulation, higher capital requirements and more robust consolidated supervision. Other features of the plan include: establishing a new Financial Services Oversight Council to identify emerging systemic risks; making the Federal Reserve the systemic risk regulator; creating a new National Bank Supervisor; eliminating the federal thrift charter and creating a Consumer Financial Protection Agency.
The full text of the proposal is available at http://www.financialstability.gov/docs/regs/FinalReport_web.pdf
More information on this topic is available in Thompson Publishing Group's Money Manager's Compliance Handbook.
Hedge fund advisers would be regulated by the Securities and Exchange Commission under the Investment Advisers Act of 1940, according to the Obama Administration's proposed rewrite of financial regulations released June 17. The requirement, which would extend to private equity funds and venture capital funds, would include a "modest" but as yet unspecified threshold for assets under management.
The President's proposal also would establish a comprehensive structure for supervising all over-the-counter derivatives, including credit default swaps. Under the plan, the Commodities Exchange Act would be amended to authorize both the SEC and the CFTC to impose recordkeeping and reporting requirements on various types of derivative products. In addition, all standardized OTC derivatives transactions would be executed through regulated, transparent, central counterparties overseen by the Federal Reserve, according to the proposal.
While the administration abandoned any notion of combining the SEC and the CFTC, the administration gave the two agencies until Sept. 30 to come up with a plan to harmonize statutory and regulatory requirements for futures and securities. "While differences exist between securities and futures markets, many differences in regulation between the markets may no longer be justified," the plan states. The agencies must submit to Congress a list of all existing conflicts with respect to similar types of financial instruments and either justify or eliminate the differences.
While the President's plan would institute stronger capital requirements for all financial firms, it would subject the largest, "most interconnected and highly leveraged" firms to stricter prudential regulation, higher capital requirements and more robust consolidated supervision. Other features of the plan include: establishing a new Financial Services Oversight Council to identify emerging systemic risks; making the Federal Reserve the systemic risk regulator; creating a new National Bank Supervisor; eliminating the federal thrift charter and creating a Consumer Financial Protection Agency.
The full text of the proposal is available at http://www.financialstability.gov/docs/regs/FinalReport_web.pdf
More information on this topic is available in Thompson Publishing Group's Money Manager's Compliance Handbook.
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