| WASHINGTON/NEW YORK
WASHINGTON/NEW YORK Oct 12 The top U.S.
securities regulator is unlikely to approve rules this year that
would restrict fund managers' use of derivatives and require
additional planning to prevent service disruptions, one of the
agency's members said on Wednesday.
Michael Piwowar, the sole Republican member of the
Securities and Exchange Commission, told a conference at
Georgetown University he did not foresee the regulator voting on
the final rules for derivatives and transition planning before a
change in the presidential administration after Nov. 8
The timeline could be a fatal setback for two pillars in the
SEC's effort to boost oversight over asset managers and the
funds they offer as fears their lending and investing activities
could pose broader risks to the marketplace have led to
heightened scrutiny by regulators.
The commission's current chair, Mary Jo White, originally
identified finalizing the derivatives rule among her priorities
for the year. But the proposal, revealed last December, drew
fire from fund managers.
Industry representatives said the restrictions could curtail
techniques used to reduce risk and manage bond funds,
"leveraged" exchange-traded funds (ETFs) and other products.
The transition planning proposal, meanwhile, would require
fund managers and other investment advisers put plans in place
laying out how they would minimize disruptions during
catastrophes such as natural disasters, cyber-attacks,
technology failures or the departure of key personnel. Industry
groups have also pushed back on elements of that policy.
The next U.S. president, who will be inaugurated in January,
could choose to replace White, which may further delay some of
its rule changes. At the same time, a new chair may have a
different agenda and decide to put some SEC proposals on the
Piwowar voted against releasing the derivatives proposal,
which had been years in the making, saying the SEC should wait
until after it gathered data on the issues.
Speaking to reporters while attending the Washington D.C.
conference, Piwowar said there are still questions about how
hard caps on derivatives use would affect leveraged funds and
the ability of funds to "hedge," or cut risk.
On Thursday, the commission will vote on a data-gathering
proposal for funds as well as another proposal governing how
funds manage the risk of having to offload hard-to-sell assets
to meet redemptions.
(Reporting by Lisa Lambert in Washington D.C. and Trevor
Hunnicutt in New York; Editing by Alan Crosby)