The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the US regulators, have drafted plans to further govern hedge funds in the US following orders laid down by the Dodd-Frank Act.
The new plan would require some hedge funds, private equity funds and private investment advisers to disclose confidential data, such as assets under management and trading activity, in quarterly reports to the regulators. The requirements primarily affect firms managing more than $1 billion in assets, which number around 200 in the US but which together control around 80% of the AuM of private funds in the country, the SEC says.
For hedge funds, private equity funds and liquidity funds, the information required would be tiered so that we would receive more detailed information from larger private fund advisers, rather than imposing the same reporting requirements on all private funds, Mary Schapiro, chairman of the SEC, said in a statement.
The plan is currently under a 60-day comment period before a final decision will be made. After the comment period is over, the two regulators must vote again to enact the new rules.
Such coordination is important because, collectively, hedge fund advisers based in the U.S., the U.K. and Hong Kong are estimated to represent over 92% of global hedge fund assets, Schapiro said. As a result, consistency among these jurisdictions will facilitate the sharing of consistent and comparable information for systemic risk assessment purposes, and minimize the burdens on the hedge fund industry.
CFTC Chief Gary Gensler said the new rules would bring more transparency to the regulators.