SEC approves rule requiring hedge fund strategy disclosures
US regulators will begin requiring hedge funds to confidentially share more information about their investment strategies.
New rules approved on Thursday will require firms to provide more details to watchdogs, including on investments, borrowing and counter-party exposure. The Securities and Exchange Commission and Commodity Futures Trading Commission described the new regulations, which were proposed in 2022, as a way to better keep tabs on risk in the financial system.
The expansion of confidential filings that big managers must submit quarterly to the US government is one of the biggest increases in regulation for the private-fund industry in a decade. It also marks the latest move by Wall Street’s main regulators to increase oversight of the sector.
Although specific data included on the so-called Form PF isn’t made public, regulators can use it in enforcement actions and to assess broader market risks. The information collected by the regulators will bolster efforts by Financial Stability Oversight Council, according to the SEC.
SEC Chair Gary Gensler has repeatedly said that regulators need the additional data to keep pace with the growth of the private-funds industry. Funds have grown much larger and their structures more complex since the confidential filings were first required after the financial crisis, according to Gensler.
Regulators “have identified gaps in the information we receive from private fund advisers,” he said in a statement on Thursday. “The adoption also furthers investor protection efforts.”
The Managed Funds Association, which represents hedge funds, called the joint CFTC and SEC rule “misguided” and said it will actually harm regulators’ ability to monitor risks.
At the same time, “the
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