The US Securities and Exchange Commission (SEC) is drafting new rules to boost oversight of mutual funds, hedge funds and other firms, the Wall Street Journal reported citing unidentified sources.
The move is part the regulators effort to gain insight into whether the US$50 trillion asset-management industry poses risks to the financial system.
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The WSJ report said that the SEC is in the early stages of developing rules that would ask asset managers such as Fidelity Investments and BlackRock to give share information about their portfolios and conduct stress tests on their funds to determine how they would weather economic shocks.
The SEC has formed a five-member commission to frame the rules but is yet to complete a formal proposal.
Among the SEC’s concerns is some mutual funds’ use of derivatives to boost returns.
Officials are also discussing ways to limit the hedge-fund-like strategies of what are known as alternative mutual funds, including betting on some stocks and against others, trading futures contracts and using derivatives to increase leverage and boost returns, the WSJ report revealed.
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