05.20.2015

SEC Seeks to Modernize Buy-Side Reporting

05.20.2015
Terry Flanagan

The U.S. Securities and Exchange Commission today proposed to modernize and enhance the reporting and disclosure of information by investment companies and investment advisers. In addition to enhancing the quality of information available to investors, the proposal will allow the SEC to more effectively collect and use data provided by investment companies and investment advisers.

“These recommendations will vastly improve the type and format of the information that funds provide to the Commission and to investors,” said SEC Chair Mary Jo White in a release. “Investors will have better quality and greater access to information about their fund investments and investment advisers, and the SEC will have more and better information to monitor risks in the asset management industry.”

The proposals, which will apply to mutual funds, exchange-traded funds and other registered investment companies, require a new monthly portfolio reporting form (Form N-PORT) and a new annual reporting form (Form N-CEN) that require census-type information.

Form N-PORT will require registered funds other than money market funds to provide portfolio-wide and position-level holdings data on a monthly basis, including data related to the pricing of portfolio securities, information regarding repurchase agreements, securities lending activities, and counterparty exposures, terms of derivatives contracts, and portfolio level and position level risk measures.

The information will be reported in a structured data format, which will allow the Commission and the public to better analyze the information. The proposals also require enhanced and standardized disclosures in financial statements, and permit mutual funds and other investment companies to provide shareholder reports by making them accessible on a website.

The proposed amendments to the investment adviser registration and reporting form (Form ADV) would require investment advisers to provide additional information for the Commission and investors to better understand the risk profile of individual advisers and the industry, including aggregate information related to assets held and use of borrowings and derivatives in separately managed accounts.

Approximately 73% of SEC-registered investment advisers manage a wide variety of client assets in separately managed accounts, which generally provide advisory clients with individualized investment advice and direct ownership of the securities and other assets in the account.

Featured image via Wikimedia Commons, under creative commons

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