What You Need to Know
- If adopted, the proposal would improve the quality of the information the SEC receives from all Form PF filers, with a particular focus on large hedge fund advisers, Gensler said.
- The changes are also designed to enhance the Financial Stability Oversight Council’s ability to assess systemic risk.
- The plan would require more detailed information about the investment strategies employed by hedge funds.
The Securities and Exchange Commission voted Wednesday to propose amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisors to private funds — particularly large hedge fund advisors.
The amendments, which the Commodity Futures Trading Commission is concurrently considering to propose jointly with the SEC, are designed to enhance the Financial Stability Oversight Council’s ”ability to assess systemic risk as well as to bolster the SEC’s regulatory oversight of private fund advisers,” the agency said.
Comments are due by Oct. 11.
SEC Chairman Gary Gensler said at an open meeting that in the decade since the SEC and CFTC “jointly adopted Form PF, regulators have gained vital insight with respect to private funds. Since then, though, the private fund industry has grown in gross asset value by nearly 150% and evolved in terms of its business practices, complexity, and investment strategies.”
If adopted, Gensler said, the proposal “would improve the quality of the information we receive from all Form PF filers, with a particular focus on large hedge fund advisers. That will help protect investors and maintain fair, orderly, and efficient markets.”
The proposed amendments would enhance how large hedge fund advisors report certain data to the SEC as well as require further basic information about advisors and the private funds they advise, including assets under management as well as withdrawal and redemption rights.
The proposal would also require more detailed information about the investment strategies, counterparty exposures, and trading and clearing mechanisms employed by hedge funds.
Feedback ‘Critical’ in Two Areas
SEC Commissioner Jaime Lizárraga said in a statement that public feedback will be critical for two areas of the proposal.