Thursday, 31 July 2014
Last updated 36 min ago
Jul 22 2010 | 1:18pm ET
Hedge fund registration and limits on banks’ participation in the alternative investments industry are both now the law of the land. President Barack Obama yesterday signed the most sweeping U.S. financial regulation reform since the Great Depression.
“I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all,” Obama said at the bill-signing ceremony, held at the Ronald Reagan Building in Washington, D.C.
“Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes,” the president added.
The alternative investments provisions are a very small part of the 2,300-page law, which creates a new consumer financial protection agency and gives regulators the authority to wind-down institutions that present a systemic risk to the economy. But what provisions there are will certainly have an effect on the way hedge funds and private equity firms do business.
For one, both hedge funds and p.e. firms—those with more than $150 million in assets, anyway—will have to register with the Securities and Exchange Commission. They’ll also have to disclose more information to the regulator and will be subject to SEC audits.
The bill also includes a watered-down version of the Volcker rule, strictly limiting to 3% the amount of its capital a bank can invest in hedge funds and private equity funds.
Still unclear is if or how the new financial super-regulator—the Financial Stability Oversight Council, which includes representatives of the SEC, Federal Reserve and Treasury Dept.—will affect hedge funds or private equity firms. That body has been given authority over firms deemed systemically relevant, but it is not clear whether any hedge funds would fall under that definition.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…