SEC derivatives rule may lead to new products

Proposed VAR limit is expected to benefit risk parity and defined outcome strategies


A newly proposed rule on derivatives use by US mutual funds will require asset managers to overhaul their risk management practices, but it could also make it easier for them to offer new products that aim to balance risk or provide a buffer against losses.

The US Securities and Exchange Commission is planning to replace the piecemeal patchwork of no-action letters and regulatory guidance on funds’ derivatives usage with sharper risk-based requirements. A rule proposed on November 25 would

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