Regulatory Alerts2015-12-28 | 2015-31704Added
Use of Derivatives by Registered Investment Companies and Business Development Companies
The Securities and Exchange Commission proposes rule 18f-4 to update the regulatory framework for registered investment companies and business development companies regarding their use of derivatives and financial commitment transactions. The proposed rule permits these funds to engage in such transactions despite section 18 senior security restrictions, provided they adhere to portfolio limitations on leverage, maintain qualifying coverage assets, and implement formalized risk management programs. Additionally, the Commission proposes amendments to Form N-PORT and Form N-CEN to require enhanced reporting and disclosure of derivatives usage and risk metrics.
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