It has been 10 years since the sec implemented compliance rules for mutual funds and ETF providers, and one thing is clear, firms must implement a vigorous and credible program. Based on various studies, firms should spend at least one basis point of total assets on compliance with a minimum of 5% of revenue or 7% of operating costs. If you are a small fund with limited resources, a new fund, or an established fund looking to make compliance more of a priority, you should assess your needs and resources with the same calculated analytics that you apply to other parts of your business. Here are some considerations to incorporate into your line of questioning to ensure you spend wisely.
First, you need a competent chief compliance officer with the appropriate knowledge, skills and training to navigate today's complex regulatory environment. The SEC is committed to supporting the role of CCO and not holding funds and ETFs responsible for the isolated actions of rogue employees - as long as it has a comprehensive compliance program in place.