Norm Champ has been on the job as Director of the Division of Investment Management at theSecurities and Exchange Commission for eight months and a lot of mutual fund executives are nervously waiting for the SEC has in store for the industry in 2013 and beyond.

In a remark at the Investment Management Institute 2013 conference, Champ’s Deputy DirectorDavid Grim delivered an outline on what Champ is focusing on both in the near future and long-term.

According to Grim, the first short-term regulatory priority is money market funds, “which may be the most high-profile issue on the Division’s plate these days.” According to Grim, in late 2012 the SEC’s economists published a significant study on money market funds that responded to questions posed by three SEC Commissioners.

“The results of that study have served as a catalyst for renewed and energized focus by the SEC staff and Commissioners on additional structural reform of money market funds,” he said.

“At the direction of the chairman, the staff is engaged with the commissioners and hard at work on developing a money market fund reform recommendation.”

The SEC is working to provide the fund industry, fund directors, and the investors with guidance under the Investment Company Act regarding funds’ and fund directors’ valuation responsibilities, according to Grim.

“It is one thing to identify prices for a large cap equity fund that is investing in frequently-traded, highly-liquid securities. It is quite another for a fund that is heavily invested in thinly-traded bonds, derivative instruments and other securities that have no readily-available market price to draw from,” he said.

On the horizon, Grim said the SEC is beginning work on a rule that would create a summary prospectus for variable annuities, a type of hybrid insurance and investment product, similar to the one it adopted for mutual funds a few years ago.

Also, Grim said the SEC has renewed its efforts to pursue implementation of a rule that was proposed in 2008 that would basically allow ETFs to operate without obtaining individual exemptive relief – “a process that, while important for novel products, can be costly and time-consuming.”

“If ETFs of new sponsors could come to market without having to obtain their own exemptive relief, the Division could reallocate staff resources from the review of ‘plain vanilla’ applications to more novel applications,” he said.

As well, the SEC is examining how to enhance and streamline its data collection efforts for mutual funds and other investment advisors. “The purpose of this initiative is to improve the quality and usefulness of information that funds provide to investors and to the SEC, and to eliminate duplicative filings or disclosures. It could make the SEC a better regulator and it could make investors better informed,” said Grim.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access