Susan Ferris Wyderko, CEO & President, Mutual Fund Directors Forum
Key regulatory concerns for fund boards typically focus on one particular regulation. In 2016, however, things are shaping up differently.
Rather than just one area of focus, funds and their boards are facing an increasingly active SEC in a number of significant areas - including liquidity, derivatives, and intermediary payments. Directors begin the year under pressure to understand how they will incorporate these potential new oversight duties into their ever-expanding responsibilities.
Given the current state of the fixed income markets, boards had already been focusing keenly on liquidity. While the SEC's liquidity proposal preserves the historic oversight role of fund boards, other portions of the rule would transform the way funds approach liquidity.
Following closely on the heels of the liquidity release was the SEC's proposal regarding fund use of derivatives. The proposal has the potential to change the way boards approach their oversight of how their funds use derivatives. If those issues were not enough for boards to absorb, the SEC staff also recently released guidance on board oversight of payments to intermediaries.
While boards welcomed guidance from the staff in this area, particularly in light of dramatic changes in the industry since the staff last weighed in on the issue in 1998 and the recent sweep exam, boards still lack the ability to force intermediaries to provide detailed information on how much various recordkeeping and other services cost.