New York (HedgeCo.Net) – SEC Chair Mary Jo White announced in a speech at The New York Times DealBook Opportunities for Tomorrow Conference, that she has chosen to focus on the regulation of funds and their advisers.

“We are now embarking on a new period of regulatory change, driven by long-term trends in the industry and the lessons of the financial crisis.” White said. “A more comprehensive approach is required to address the risks associated with the increasingly diverse nature of fund holdings and the use of derivatives.”

Chair Mary Jo White said the SEC would focus on the following:

• First, we must improve the data and other information we use to draw conclusions about the risks of the asset management industry and develop appropriate regulatory responses.  Existing data requirements need to be expanded and updated.
• Second, we must take steps to ensure that registered funds enhance their fund-level controls so that they are able to identify and address risks related to the composition of modern portfolios, whether those spring from the overall financial profile of a fund, such as its liquidity levels, or the nature of specific instruments, such as derivatives.
• And third, we must take steps to ensure that firms have a plan for transitioning their clients’ assets when circumstances warrant.  If we have learned nothing else from the financial crisis, it is that we must test and plan for the worst.

“Our objective, however, is not to eliminate all risk.  Far from it.  Investment risk is inherent in our capital markets – it is the engine that gives life to new companies and provides opportunities for investors.  Just as our regulatory program evolves, so too must our understanding of the balance that program strikes between reducing undue risks and preserving the principle of “reward for risk” that is at the center of our capital markets.” White concluded.

There are more than $63 trillion of assets under management, with over 11,000 investment advisers and almost 10,000 mutual funds registered with the SEC. Private funds have also grown significantly in number and size, and many mutual funds are now engaging in alternative investment strategies and using derivatives.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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