MutualFundWire.com: CFTC Ruling Could Make Alts Cost More

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Friday, July 5, 2013

CFTC Ruling Could Make Alts Cost More

U.S. News and World Report's Rob Silverblatt asked the question, "Are Alternative Mutual Funds About to Get More Expensive?" in the wake of a recent court ruling, but failed to provide an answer. The D.C. Circuit Court upheld regulations that would require mutual funds that trade derivatives to report to the U.S. Commodity Futures Trading Commission last week.

The CFTC argued that new regulations would protect investors from the kind of speculative trading that hurt the financial market in 2008 but ICI says the cost of reporting will be passed down to the investor. These funds also register with the SEC already, doubling the paperwork. If Silverblatt tells us anything, it's that the ICI is still working to reduce reporting redundancy:

In an effort to reduce the burden on funds, regulators will seek to "harmonize" the SEC and CFTC reporting requirements to reduce redundancies. The ICI said in a statement that it intends to be actively involved in that process. "While we continue to believe that the CFTC's recent [regulations] were improperly adopted, we intend to focus on ensuring that the CFTC's regulatory regime as it evolves does not adversely affect fund investors," Karrie McMillan, the ICI's general counsel, said.