CFTC Seeks Public Comment on Possible Changes to Regulations for Investment of Customer Funds Deposited with Clearing
The CFTC published a notice in the Federal Register indicating that it is reconsidering the standards that apply to derivatives clearing organizations and futures commissions merchants with respect to the investment of customer segregated funds (e.g., those held as margin) and customer money, securities, and property associated with positions in foreign futures and foreign options (“30.7 funds”). Current CFTC Rule 1.25 specifies a range of permissible vehicles, including money market funds, for the investment of customer segregated funds. The investment of 30.7 funds is subject to a less specific fiduciary standard that requires the investment chosen to be at all times liquid and sufficient to cover all obligations to the customer in question; Regulation 1.25 investments are appropriate, as are investments in “any other readily marketable securities.” The notice cites concern that “the market events of the past year, notably the failures of certain government sponsored enterprises, difficulties encountered by certain money market mutual funds in honoring redemption requests, illiquidity of certain adjustable rate securities, and turmoil in the credit ratings industry, have challenged many of the fundamental assumptions regarding investments.” The CFTC believes it is an especially appropriate time to review permitted investments for customer segregated funds and 30.7 funds, and is considering significantly revising the scope and character of permitted investments for customer segregated funds and 30.7 funds. The notice is designed to elicit public comment to inform the CFTC in issuing any proposed amendments to Regulations 1.25 or 30.7. Comments must be received no later than July 21, 2009. The CFTC release is available at http://edocket.access.gpo.gov/2009/pdf/E9-12020.pdf.
May 26, 2009 No Comments
The SEC and DOL will be holding a joint public hearing on June 18, 2009 examining target date funds, life cycle funds and other similar investments products (collectively, “TDFs”). TDFs typically are mutual funds that allocate their investments among various asset classes and adjust the allocation toward more conservative investments as a specified “target date” approaches. The SEC and DOL are accepting requests to participate by presenting testimony and answering questions at the hearing. Discussion topics at the joint hearing will include issues related to how TDF managers determine asset allocations and changes to asset allocations over time; how they select and monitor underlying investments; how the foregoing and related risks are disclosed to investors; and approaches to comparing and evaluating TDFs. Additional information on making a request to participate in the public hearing, which must be submitted by 3:30 p.m., EST, June 5, 2009, is available at http://www.sec.gov/rules/other/2009/ic-28725.pdf.
May 26, 2009 No Comments