News & Events

Corporate Partner Rajib Chanda was quoted in Ignites, a Financial Times news service, regarding the SEC’s proposed derivatives rule that seeks to limit use of derivatives by registered funds, establish a risk management program for derivatives transactions by funds, and require funds to maintain a segregated pool of assets to manage against risk. The rule was proposed in December 2015, but asset managers and the Investment Company Institute expressed concern that the framework of the proposed rule would unduly restrict the investment strategies of funds. Earlier this week, the SEC requested further comment on the rule after releasing a new economic analysis that compared the risks of underlying reference assets with the way other regulators adjust gross notional derivatives based on risk. Rajib commented that the agency’s finding that the calculations have a “rough equivalence” could be a “foreshadowing” of what the SEC will use in its final rule. Last month, Commissioner Michael Piwowar, one of only three Commissioners as a result of two unfilled vacancies, said he was only committing to working on four specific rules already on the SEC agenda – which did not include the derivatives rule. However, Rajib noted, “In a sense, the new [analysis] suggests that notwithstanding Commissioner Piwowar’s public statement, the staff is proceeding as if some form of a derivatives rule will be proposed this year…I don’t think they would have put this out now if the rule [were] dead.”