The Securities and Exchange Commission (SEC) chairman Mary Jo White has unveiled a set of plans to address potential risks in the US asset management industry.
The plans include subjecting asset management groups and exchange traded funds to stress tests to determine how they can sustain another financial crunch, and forcing them to sketch out plans to unwind business in case of major disruption.
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The watchdog is also likely to force mutual funds to be sold to retail investors to reduce use of risky derivatives.
Moreover, SEC is looking to improve access to data from major asset management groups, as well as has proposed to increase the level of disclosure of portfolio holdings.
The rules would first target more alternative investments, including hedge fund-like strategies made available to retail investors.
White has recommended that in this work, SEC would be complemented by the Financial Stability Oversight Council, which is also examining potentially risky products and activities in the asset-management sector.
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By GlobalData
