Yesterday, the Investment Adviser Association published our article on "Dealing with the New Derivatives Rule: A Guide of Legal and Compliance Professionals" in the "Compliance Corner" of its September 2021 IAA Newsletter.
At a high level, the article:
- Provides a background on the limitations on senior securities under the Investment Company Act of 1940 (the "1940 Act");
- Affords readers with an overview of Rule 18f-4 under the 1940 Act;
- Summarizes how a fund qualifies as a limited derivatives fund (including a six-step process for calculating derivatives exposure); and
- Describes the key elements of a derivatives risk management program that is required to be implemented by a fund that does not qualify as a limited derivatives fund (i.e., a VaR Fund).
Regular readers of this blog have already read about all of this in more detail. But the article provides a handy summary, including many of the tables found in our posts.
We are grateful for the opportunity to have contributed the article to the IAA Newsletter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.