SEC Proposes Expansion of Reporting Requirements for Private Funds, Trading Platforms
The Securities and Exchange Commission (SEC) recently voted to issue two proposals that would require segments of the market to disclose more financial information more frequently and Alternative Trading Systems that trade Treasuries and other government securities to register with the SEC.
In an effort to increase transparency and the ability of the Financial Stability Oversight Council (FSOC) to analyze potential risks in a timely manner, the first proposal would require certain advisers to hedge funds and private equity funds to file Form PF within one business day of an event that could be relevant to financial stability and investor protection. Examples stated in a Fact Sheet include “certain extraordinary investment losses, significant margin and counterparty default events, material changes in prime broker relationships, changes in unencumbered cash, operations events, and events associated with withdrawals and redemptions.”
Additionally, the proposal would lower the reporting threshold for large private equity advisers from $2 billion to $1.5 billion in private equity fund assets under management. Finally, the proposal would amend Form PF to require large private equity funds and large liquidity funds to provide more information in an effort to enhance the SEC’s risk assessment efforts.
The second proposal would bring more Alternative Trading Systems that trade Treasuries and other government securities under the regulatory umbrella. Regulation ATS would be extended to include systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers for trading any type of security.
The proposal would also bring Treasury trading platforms with significant volume under Regulation Systems Compliance Integrity (SCI), a rule that protects for the resiliency of technology infrastructure, as well as require platforms to comply with the Fair Access Rule.