The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission on Monday jointly proposed reforms to Biden-era regulations on enhanced disclosures by the US$26-trillion private fund industry, the agencies announced.
The SEC said the changes, if adopted, would reduce burdens on the private funds and investment advisers while still requiring the collection of “necessary and appropriate” information.
“A key pillar of my agenda is restoring balance to disclosure obligations and reducing the cost of compliance wherever possible,” SEC Chairman Paul Atkins said in a statement.
Despite Republican objections, under former President Joe Biden, the SEC and CFTC jointly required hedge funds, private equity and others to report exposures to investments, counterparties and currencies as well as exposures to countries and industries, the performance of investments by strategy and the liquidity of portfolios, among other things. They said these rules were necessary to detect risk in the financial system.
Republican SEC and CFTC members said at the time that the rules were excessive and could jeopardize sensitive confidential data. There are currently no Democrats appointed to either commission. And, since taking control last year, the Trump administration has repeatedly pushed back the effective date for the rules to allow officials time to adopt modifications.
The changes proposed on Monday would reduce the number of firms required to make such disclosures by lifting a qualifying threshold for smaller advisers from US$150-million in assets under management to US$1-billion and, for “large” hedge fund advisers, from US$1.5-billion to US$10-billion.
These changes would still capture 90 per cent of assets under management, according to the SEC.
The proposal will be subject to a 60-day public comment period before any decision on a final version by the agencies.