The Commodity Futures Trading Commission (CFTC) join forces with the Securities and Exchange Commission (SEC) to require hedge funds and private equity funds to increase their disclosures to regulators.
The proposed new regulation, required by the Dodd-Frank financial regulation reform law, was written jointly by the two regulators. More specifically, the CFTC proposed a rule that would require private fund advisers to provide an array of information to the agency and the SEC for risk-monitoring purposes.
Included in the information sought by the two agencies is data on assets, leverage, counterparty risk, valuation, positions and trading. While all funds would have to make some disclosures, the toughest regulatory burden falls on the largest managers, those with more than $1 billion in assets. Such firms will have to file reports to regulators on quarterly basis.
The reason for more frequent disclosures is that while the group of large private fund advisers is relatively small in number, it represents a large majority of private funds’ assets. In fact, 200 such firms in the U.S. control more than 80% of private fund assets under management.
In turn, the SEC and CFTC would also share the information they collect with the Financial Stability Oversight Council.
