The proposal would place restrictions on certain investment funds to limit their use of derivatives and require certain risk management procedures.
On December 11, 2015, the US Securities and Exchange Commission (SEC) proposed a new Rule 18f-4 (the Proposed Rule) under the Investment Company Act of 1940 (ICA) to limit the use of derivatives and other leveraged transactions by mutual funds, exchange-traded funds, closed-end funds and business development companies (BDCs) (collectively, Funds). Private funds that are excluded from regulation under section 3(c)(1) or 3(c)(7) of the ICA would not be subject to the Proposed Rule.
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