Since the last issue of our IM Update, we have also published the following separate Alerts of interest to the investment management industry:
November 24, 2014
The ISDA 2014 Resolution Stay Protocol, recently published by the International Swaps and Derivatives Association, Inc., represents a significant shift in the terms of the over-the-counter derivatives market. It will require adhering parties to relinquish termination rights that have long been part of bankruptcy “safe harbors” for derivatives contracts under bankruptcy and insolvency regimes in many jurisdictions. While buy-side market participants are not required to adhere to the Protocol at this time, future regulations will likely have the effect of compelling market participants to agree to its terms. This change will impact institutional investors, hedge funds, mutual funds, sovereign wealth funds, and other buy-side market participants who enter into over-the-counter derivatives transactions with financial institutions.
November 7, 2014
On November 6, 2014, the SEC issued a notice of intention to grant an application for exemptive relief filed on behalf of Eaton Vance Management, Eaton Vance ETMF Trust, and Eaton Vance ETMF Trust II. If granted, the Application would permit the operation of a new type of exchange-traded fund, called an exchange-traded managed fund (“ETMF”), the shares of which would trade on an exchange at prices that are based on the net asset value (“NAV”) next determined at the end of each day.
October 29, 2014
The Alternative Investment Fund Managers Directive (the “AIFMD”) introduces new regulatory reporting requirements for alternative investment fund managers (“AIFMs”) established in the European Economic Area (“EEA”) and non-EEA AIFMs that market their fund in an EEA state. These requirements are broadly similar to those already imposed in the U.S. on registered investment advisers that manage private funds, pursuant to the Form PF reporting regime, although there are important differences between AIFMD reporting and Form PF.
October 21, 2014
We have recently observed a surge in freedom-of-information (“FOIA”) requests made by media outlets to state pension funds and other state-government-affiliated investment entities. Although the requests have so far concentrated on information related to private equity sponsors, they have also sought information about investments with other alternative investment fund sponsors. Many state-level FOIA laws exempt confidential business information, including private equity or other alternative investment fund information in particular, from disclosure. A prompt response, supported by the applicable state law, can help ensure that confidential information that is exempt from FOIA disclosure is not released.
October 17, 2014
On October 15, 2014, the Commodity Futures Trading Commission (“CFTC”) staff issued Letter 14-126 (the “October Letter”), which provides self-executing registration relief to a commodity pool operator (“CPO”) of a fund that delegates its rights and obligations as a CPO to another entity that will serve as the registered CPO of the fund, if certain conditions are met. The October Letter replaces CFTC Letter 14-69, which required each CPO to receive its own no-action letter to be able to delegate its CPO functions to a registered CPO. If the conditions of the October Letter are not met, a CPO will still need to obtain its own no-action letter.
October 1, 2014
The European Regulation on Derivative Transactions, Central Counterparties and Trade Repositories (known as the European Market Infrastructure Regulation (“EMIR”)) requires counterparties to clear over-the-counter (“OTC”) derivative transactions if the transaction is in a class of trades subject to the clearing obligation. Clearing is the process by which an OTC derivative trade is executed in the ordinary course and then novated to a clearing house, which is substituted as the counterparty to each party to the trade.
September 26, 2014
U.S. Federal banking regulators and the Commodity Futures Trading Commission recently re-proposed rules providing for minimum margin requirements for uncleared swaps executed by swap dealers and major swap participants. This Alert discusses some of the key features of the proposed rules.