SEC launches new 2018 disclosure forms
15 August 2017 Washington DC
Image: Shutterstock
New securities lending disclosure forms Forms N-1A, N-3 and N‑CSR are now in play for open-end and closed-end funds in the US, as of 1 August.
The new rules require funds to disclose gross and net income from securities lending activities, fees and compensation in total and broken down by enumerated types.
A description of the services provided to the fund by the securities lending agent is also required.
Amendments were made to the forms following a lengthy US Securities and Exchange Commission (SEC) consultation.
Forms N-1A and N-3 also require certain disclosures in fund statements of additional information regarding securities lending activities, as well as amendments to Form N-CSR for closed-end funds.
The SEC originally proposed that similar requirements be included in fund financial statements as part of the proposed amendments to Regulation S-X in order to allow investors to better understand the income generated from, as well as the expenses associated with a fund’s securities lending activities.
Some commenters stated that this would yield estimates that may be costly to audit, and that lengthy disclosure concerning securities lending activity in a fund’s financial statements could detract from other financial statement disclosures.
The SEC acquiesced to the industry’s requests for further changes and the final draft included adopting disclosure requirements to the fund registration forms rather than as amendments to Regulation S-X.
Open-end funds with a 31 July fiscal year-end must now utilise the amended forms in its statement of additional information filed on Form N-1A in its 2018 year-end filings.
Closed-end fund should include the amendments to Form N-CSR in the next fiscal year-end reporting deadline of 28 February 2018.
The new rules require funds to disclose gross and net income from securities lending activities, fees and compensation in total and broken down by enumerated types.
A description of the services provided to the fund by the securities lending agent is also required.
Amendments were made to the forms following a lengthy US Securities and Exchange Commission (SEC) consultation.
Forms N-1A and N-3 also require certain disclosures in fund statements of additional information regarding securities lending activities, as well as amendments to Form N-CSR for closed-end funds.
The SEC originally proposed that similar requirements be included in fund financial statements as part of the proposed amendments to Regulation S-X in order to allow investors to better understand the income generated from, as well as the expenses associated with a fund’s securities lending activities.
Some commenters stated that this would yield estimates that may be costly to audit, and that lengthy disclosure concerning securities lending activity in a fund’s financial statements could detract from other financial statement disclosures.
The SEC acquiesced to the industry’s requests for further changes and the final draft included adopting disclosure requirements to the fund registration forms rather than as amendments to Regulation S-X.
Open-end funds with a 31 July fiscal year-end must now utilise the amended forms in its statement of additional information filed on Form N-1A in its 2018 year-end filings.
Closed-end fund should include the amendments to Form N-CSR in the next fiscal year-end reporting deadline of 28 February 2018.
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