SEC Seeks Comment on Use of Derivatives by Mutual Funds

On August 31, the SEC requested comments on issues raised by the use of derivatives by mutual funds and other investment companies regulated under the Investment Company Act, including: (i) how different types of funds use derivatives; (ii) how to measure the amount of leverage a fund incurs when investing in a derivative; (iii) how a fund should value a derivative for diversification purposes; (iv) how investing in a derivative from a broker-dealer differs from investing in the broker-dealer’s stocks or bonds; (v) how funds determine the industries to which they may be exposed through a derivative; and (vi) whether the SEC should issue guidance on how funds should value derivatives. Comments must be submitted within 60 days after publication in the Federal Register. SEC Release.