The Securities and Exchange Commission has proposed new rules and forms intended to “modernize and enhance” reporting for mutual funds, ETFs, and other registered investment companies.

A new monthly portfolio reporting form, Form N-PORT, would require registered funds (other than money market funds) to provide portfolio-wide and position-level holdings data to the SEC on a monthly basis.  The form would require monthly reporting of the fund’s investments, including:

Data related to the pricing of portfolio securities.

Information regarding repurchase agreements, securities lending activities, and counterparty exposures.

Derivative disclosures displayed prominently in financial statements, rather than in the notes.  Current requirements do not require specific information for many types of derivatives, including swaps, futures, and forwards.

Information in the notes to the financial statements relating to a fund’s securities lending activities.

Portfolio level and position level risk measures to better understand fund exposure to changes in market conditions.

A new annual reporting form, Form N-CEN, would require registered funds to report, on an annual basis, census-type information. It would replace the current Form N-SAR.  The reports would be filed each year within 60 days of the end of the fund’s fiscal year, rather than semi-annually as currently required for most funds. The information would be reported in a structured data format, which would facilitate the use of this data by the Commission and public.

The SEC’s 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. Proposed amendments to the investment adviser registration and reporting form (Form ADV) require investment advisers to maintain records of calculations and communications related to performance. New information requirements include:

Requiring aggregate information related to assets held and use of borrowings and derivatives in separately managed accounts. Approximately 73 percent 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.

Permitting certain “umbrella registration” filing arrangements that are currently outlined in staff guidance.

Providing additional information about an adviser’s advisory business and including branch office operations and the use of social media.

The comment period for the proposed rules will be 60 days after publication in the Federal Register.

 

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