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B. G., Opalesque Geneva:

The U.S. Securities and Exchange Commission voted on October 28th to enhance the regulatory framework for derivatives use by registered investment companies, including mutual funds (other than money market funds), exchange-traded funds (ETFs) and closed-end funds, as well as business development companies.

The new rule and rule amendments are meant to modernise the approach to the regulation that addresses investor protection concerns.

"Derivatives have come to play an important role for many funds in portfolio strategy and risk management, but the regulatory approach for derivatives use has been inconsistent and outdated," said SEC Chairman Jay Clayton. "Today's action provides for a comprehensive framework for funds' derivatives use that provides both meaningful protections for investors and regulatory certainty for funds and their advisers. Importantly, the new comprehensive limits on risk will prohibit derivatives use that is inconsistent with the leverage limits imposed by the Investment Company Act, but will allow virtually all funds to continue to serve their investors using the most efficient instruments. I thank the staff for their impressive work."

The Investment Company Act limits the ability of funds and companies to engage in transactions that involve potential future payment obligations, including obligations under derivatives such as f......................

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